10 Real Estate Trends to Watch in 2018 (part 2)

2018 is already well underway and that includes the real estate market, as homeowners, sellers, and buyers alike all have critical questions about what the rest of the calendar year will hold.

For the third year in a row now, we've combed the best research by economists, analysts, and experts and summarized it for you with these ten real estate market trends to watch for the rest of 2018 – and beyond. 

In part one of this blog, we covered the first six of these ten trends to watch, so here are the final four (plus, a bonus trend).

Are you thinking about selling your home and moving up to your dream home this year? Finally investing in rental properties? Or maybe selling and downsizing? How will interest rates affect the real estate market?

You'll definitely want to read this so you can make the best, well-informed decision.

7. The GREAT news – experts predict a “soft landing”

Will home appreciation slow in 2018? We certainly hope so.

That may sound contrarian coming from someone that makes their living selling real estate, but the simple truth is that we all still feel the sting from the housing crash and Great Recession, and want to avoid those mistakes at all costs. 

Thankfully, white-hot home appreciation that is based on the "Gold Rush mentality," artificially-low interest rates, and reckless bank lending is a thing of the past.

In today’s real estate cycle, expansion is slowing, which is a completely normal and even healthy process of any market. There are still a whole lot of factors encouraging people to buy homes, as well a few economic fundamentals that point to caution. But that’s the sign of a balanced market, which is always best for everyone. 

Caution, common sense, and the impetus to buy or sell a house ONLY if it’s priced fairly act as parachutes, keeping the housing market from ever falling too quickly. 

And in Sacramento, there are even more factors that point to a home price gains this year, albeit a little bit slower and more measured than the last few years. That should inspire even more consumer confidence that the highs will be rolling hills, not sheer cliffs, and the real estate market will be strong for a long time to come.

8. Housing technology science fact not fiction

We often talk about breakthroughs in new technology for homes and real estate, but it usually applies to space-aged appliances, really cool TVs, and state-of-the-art remotely operated security systems, etc. 

But technology is shooting past luxury amenities and this year, as practical high-tech housing will rule. For instance, the incredible demand for affordable housing (homeownership rates are at an all-time modern low AND rents are rising steadily in most major markets) is pushing companies, investors, and inventors alike to create new solutions. Prefab homes that can be helicoptered in and dropped on location, homes that are 3D printed within one day, and other ingenious home construction advances aren't just a thing of science fiction, but present-day fact.  

Tech evolutions in the luxury marketplace, like sinking floors, shape-shifting walls, and complete automation of every light, door, and system in your home are sure to continue, but technology will really skyrocket when it solves real-world problems for the entire housing market. So,  2018 will be the year we look back and say it was a “tipping point” in that technology. 

9. Inventory better, but still lags

We still don't have enough houses for sale around the country to fulfill the demand, whether new construction or existing homes. In fact, while more projects that were initiated in 2016 and 2017 are finished in 2018 and available for a resident, the inventory shortage still has a long way to go. Somehow, rental prices are surging in most metro markets at that same time as home prices because of this shortage, and that double-edged sword is especially true in the Sacramento area.

Of course, no one could have anticipated the additional home shortage caused by the myriad natural disasters we suffered through in 2017. In some cities and states around the country, millions of homes were lost – for both owners and renters – due to flooding, tornados, wildfires, etc.

But the need for housing also presents incredible opportunities for landlords, investors, savvy homeowners, and even first-time buyers who put in the time and work to find the right home in 2018.

10. Tax bill shakeup

No matter where you sit on the political spectrum, the recent passing of a historic tax bill still poses more questions than it does answers. Will a rising economic tide “lift all boats” – including the real estate market? Did saving (although capping) the Mortgage Interest Deduction make it a non-factor for homeowners? Or, will the sting from new property tax rules further slow homeownership rates? We’ll find out in 2018!

Bonus trend:

Interest rate roundup

In part one of this blog, we pointed to a possible interest rate “nudge” this year, as we predicted 30-year mortgage rates settle somewhere between 4% and 4.5% this year. Since writing that only 45 days ago, guess what happened? As predicted, rates are already hair higher than we enjoyed in 2017, but rates are still FANTASTIC if you view them through a long-term lens. 

Just as important, banks will continue to ease lending standards and loosen their guidelines as the economy bustles, making homeownership a reality and more affordable for tens of millions of Americans. 

2018 is already turning out to be a great year to buy or sell a home!