Florida Real Estate News –
Buyers will gain a foothold in the market next year. It ranks the Daytona Beach area No. 3 nationwide for expected overall price and sales growth, and it ranks all Fla. metros in at least the top third for expected market growth.
2018 forecast: Higher inventory and slower price gains
SANTA CLARA, Calif. – Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease next year as part of broad and continued market improvements, according to the realtor.com 2018 National Housing Forecast.
The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is predicted based on developments realtor.com says it first noted in late summer. The annual forecast also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress.
“Next year will set the stage for a significant inflection point in the housing shortage,” says Javier Vivas, director of economic research for realtor.com. “Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.”
Fla. metros 2018 forecast rank out of top 100 U.S. metros
Rank – Metro – 2018 Sales Growth – 2018 Price Growth
3. Deltona-Daytona Beach-Ormond Beach: 5.47% sales growth, 6% price growth
5. Lakeland-Winter Haven: 3% sales growth, 7% price growth
14. Miami-Fort Lauderdale-West Palm Beach: 3.10% sales growth, 5.28% price growth
17. Orlando-Kissimmee-Sanford: 1.24% sales growth, 6.88% price growth
20. Palm Bay-Melbourne-Titusville: 1% sales growth, 7% price growth
21. Jacksonville: 4.73% sales growth, 3.2% price growth
25. North Port-Sarasota-Bradenton: 3% sales growth. 4.5% price growth
29. Tampa-St. Petersburg-Clearwater: 1.38% sales growth, 6% price growth
61. Cape Coral-Fort Myers: 1% sales growth. 3.99% price growth
Realtor.com 2018 forecast:
- Home price appreciation – 3.2% increase, enabling a sales pickup
- Mortgage rate – Average 4.6% throughout the year and reach 5.0% (30 year fixed) by the end
- Existing home sales – 2.5% growth, low inventory trend starts to reverse
- Housing starts – 3% growth in home starts; 7% growth in single family home starts
- New home sales – Increase 7%
- Homeownership rate – Stabilize at 63.9% after bottom in Q2-2016
5 housing trends for 2018:
- Inventory expected to begin to increase – In August, the U.S. housing market began to see a higher than normal month-over-month deceleration in inventory that has continued into fall. Based on this pattern, realtor.com projects U.S. year-over-year inventory growth to tick up into positive territory by fall 2018, for the first time since 2015. Inventory declines are expected to decelerate slowly throughout the year, reaching a 4 percent year-over-year decline in March before increasing in early fall, after the peak home-buying months. The majority of this growth is expected in the mid-to-upper tier price points, which includes U.S. homes priced above $350,000. Recovery for starter homes is expected to take longer because their levels were significantly depleted by first time buyers.
- Price appreciation expected to slow – Home prices are forecasted to slow to 3.2 percent growth year-over-year nationally, from an estimated increase of 5.5 percent in 2017. Most of the slowing will be felt in the higher-priced segment as more available inventory in this price range and a smaller pool of buyers forces sellers to price competitively. Entry-level homes will continue to see price gains due to the larger number of buyers that can afford them and more limited homes available for sale in this price range.
- Millennials anticipated to gain market share in all home price segments – Although millennials will continue to face challenges next year with rising interest rates and home prices, they are on track to gain mortgage market share in all price points, due to the sheer size of the generation. Millennials could reach 43 percent of home buyers taking out a mortgage by the end of 2018, up from an estimated 40 percent in 2017. With the largest cohort of millennial expected to turn 30 in 2020, their homeownership market share is only expected to increase.
- Southern markets predicted to lead in sales growth – Southern cities are anticipated to beat the national average in home sales growth in 2018 with Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C. leading the pack. Sales are expected to grow by 6 percent or more in these markets, compared with 2.5 percent nationally. The majority of this growth can be attributed to healthy building levels combating the housing shortage. With inventory growth just around the corner, these areas are primed for sales gains in years to come.
- Tax reform will be a major wildcard – At the time of the forecast, both the House and Senate had bills up for consideration, but neither had passed and their impact was not included in the forecast for 2018 sales and prices. While the ultimate impact of tax reform will depend on the details of the plan that is finally adopted, both versions include provisions that are likely to decrease incentives for mobility and reduce ownership tax benefits. On the flip side, some taxpayers, including renters, are likely to see tax cuts. While more disposable income for buyers is positive for housing, the loss of tax benefits for owners could lead to fewer sales and impact prices negatively over time with the largest impact on markets with higher prices and incomes.
© 2017 Florida Realtors