2018’s Housing Market Looks Good | Multi-Year Solid Predictions |
The nation’s housing market for 2018 continues to look good, according to two recently released reports. But first-time millennial buyers will continue to struggle with affordability, especially in high-priced areas like Los Angeles, San Francisco, Boston, New York and Washington DC.
Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”
Median price for homes currently listed in Boston is $735,000, according to Zillow.com. (Shutterstock)
DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”
Arch Mortgage Insurance Co. (Arch MI) recently released its winter 2018 edition of The Housing and Mortgage Market Review® (HaMMRSM), authored by DeFranco. The chart below looks at a 6.2% increase in home prices in 2017 compared with the year before.
ARCH Mortgage Capital Services
The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.
Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.
Realtor.com also released its “State of the Housing Union,” “which shows the strong U.S. economy and unprecedented housing shortage pressuring potential home buyers striving to attain the American Dream.” Realtor.com’s analysis pointed to the fundamentals. “Strong buyer demand, constrained inventory, and ready-to-buy first timers are the key underlying dynamics driving today’s housing market. The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry,” said Joe Kirchner, senior economist for realtor.com.
Boston, a city millennials love continues to have inventory and affordability issues. According to Zillow, the median price for homes currently listed in Boston is $735,000.
“I pay attention to numbers and we don’t have enough good property on the market. There is big demand in Boston with companies moving to here either from outside of the city or from other states,” observes David Bates, broker associate at William Ravis Real Estate
“I would be surprised to see a slowdown. I see increasing demand and very good appreciation,” adds Bates who is also known for writing about the Greater Boston real estate market for Banker and Tradesman, Boston Magazine, The Boston Globe, Boston Herald and Boston.Curbed.com.
Clearly, getting your foot in the proverbial front door of your first house remains the key to achieving the American dream.
