Based on their political experiences over the past year, US citizens have learned to expect the unexpected in life. Now, driven by a record low inventory in the real estate industry, many Americans believed there would be a moderate growth in the property market; however, this did not happen. In fact, the real estate market became hotter with the inventory tightening, prices rising, and mortgage rates hardly budging. It seemed that, as with the US political situation, the property market will become challenging in 2018. This article will provide information on estimated real estate trends for the Dayton Ohio commercial real estate and Cincinnati Ohio markets.
The Pace Of Sales Will Slow
According to several provisions in the tax bill signed by President Trump, housing in the US will change dramatically. Certain issues related to real estate will be impacted directly including changes to the mortgage interest deduction and property tax deductions. Property experts predict that households in the Dayton and Cincinnati markets will take time to examine the impact of the tax plan on properties, but this does not influence the underlying demand for wage growth since the recession. The demand from homeowners and renters will result in people being unable to locate suitable homes, meaning that the pace of sales will slow over the year.
The Real Estate Inventory Will Continue To Drag
According to the real estate search site Zillow, the property inventory in 2016 declined by approximately 10.5% in twelve months. Skylar Olsen, a senior economist at this real estate search site, stated when looking at the later figures it was seen that the US housing market began to show a fast home value appreciation throughout the country. In fact, predictions for 2018 indicate that the inventory will drag; however, it may rise slightly as the year progresses. One of the greatest reasons for a rise in the 2018 real estate inventory is that the situation is unsustainable.
In conjunction with Zillow, the home search site Trulia discovered that approximately 30% of US citizens believe 2018 to be a more beneficial year for real estate than 2017. Despite only 7% of all homeowners indicating that they are planning to sell properties, construction has begun to move away from condominiums to single-family residences. It has, however, become clearer that the typical assumption of demand prices will entice construction with builder sentiment also being greater than consumer sentiment.
The Property Price Growth Will Slow, But It Will Not Cease
During the previous two years, national home prices have continued to increase. Statistics from the US National Home Price Index indicate that property prices ranging from January 2017 to October 2017 have increased by approximately 6%. While this article is focusing on the Dayton and Cincinnati market, the hottest markets in previous years were western areas including Las Vegas and Seattle. This means that Ohio is less likely to see a strong price growth during 2018 and will follow the predicted slow property price growth. It should, however, be noted that despite the price growth being slow it will grow and not cease.
The Rental Versus The Buying Equation Can Tilt To Rental Of Real Estate
Due to the new tax regulations, it has become more challenging and expensive to own a property in high price places. For the majority of people, these types of changes when combined with rising prices will make renting a more financially beneficial option. According to reports in the Blitzer, home prices are raising more quickly than wages and salaries; therefore, this inflation makes potential homebuyers and owners compelled to consider renting properties.
The president of brokerage company Compass, Leonard Steinberg, indicated in an e-mail during his quarterly report that the beginning of 2018 was filled with a cloud of uncertainty. This uncertainty was based primarily on the new tax legislation restricting both local and state tax deductions, particularly in the California and Illinois areas. Steinberg’s question to the New York market was whether or not the consumer will become a part of the rental market and if there are diminished incentives to buy? His optimistic belief hopes not.
Nonetheless, higher rentals and increased student debt have made it more difficult for younger individuals to afford monthly mortgages, let alone save up for a property down payment. In addition, with the prices of households raising it can make the smallest increase in property mortgage rates complicated and push people beyond affordability.
Mortgage Rates Hovering Around 4%
Last year, the Federal Reserve modified short-term interest rates from 1.25% to 1.5% making the projected rates for 2018 difficult to meet. Property experts have estimated that 2018 will see mortgage rates hovering around the 4% mark; however, many disagree on how this rate will be reached. This is a touch higher than the rates for 2017, but it is still a historical low according to the chief economist at Trulia. The chief financial analyst at Bankrate.com, Greg McBride, believes that the volatility associated with mortgage rate movement is one of the potential reasons why there will be a dip or hovering around 4% during 2018.
The Demand For Houses Will Continue To Climb
Following a full decade of decline in the rate of homeownership, this rate finally ticked over during the year 2017. McBride indicated that approximately one third of all households in the United States were occupied by owners as of mid-2017, and this is an increase from a low in the second quarter of the previous year. Strangely enough, despite the high cost of properties, 2018 is estimated to see a continuation in this household occupation by owners.
The demand for houses is predicted to climb during 2018 as this generation of adults are entering the housing market. In fact, single millennials are likely to own homes contrary to the prior generations of singles. This is a positive aspect of the 2018 property market.
As can be seen, there are various predictions indicated by experts in the 2018 US property market. Using this information, you can determine how to navigate the real estate market and own property successfully.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.