Expecting to buy a home in 2018? Keeping an eye on the housing market is an important part of choosing a home that is within your budget as well as determining if it is a good time for you to buy or wait.
While looking at real estate projections for 2018, it is critical to remember that these are simply predictions and you should always speak to a professional mortgage lender and agent to determine if buying a home is right for you.
Increased Mortgage Rates
Freddie Mac predicts that in 2018 mortgage rates will rise and refinancing rates will fall to 25%, “the lowest annual refinance share since 1990.” This trend is due to the fact that in past years, homeowners took advantage of lower mortgage rates in order to refinance their mortgages. Since that may not be the case, homeowners will forgo refinancing.
Increased mortgage rates also means that home prices may go up as well.
Increased Home Prices
2017 saw home prices rise and economists are expecting them to keep rising, albeit slowly. This rising equity can mean that once it comes time to sell their home, homeowners may receive higher prices for their home. Higher home prices can also help homeowners increase their home equity.
However, there are a few caveats. For example, increased home prices means a larger down payment which can prevent first time homeowners from purchasing a home and according to Zillow, the median home price will be worth over $6,000 more and buyers will need to save at least $600 a month just to keep up. And as we’ve discussed before, how much you can put in a down payment reflects how much your mortgage rate will be each month.
More Remodeling, Less Selling
Despite the increased home prices and the price they could potentially get for them, homeowners may choose to simply remodel their home rather than go to the trouble of selling. Especially if buyers deem their home unaffordable—sellers will not want to waste the time and effort of putting their home on the market if they believe they will not be able to sell or find an affordable home of their own.
2018 may also see more homeowners renting out rooms of their home or their homes—vacation or otherwise—in order to make some extra money. Renters can use this opportunity to get credit for the rent they pay in order to help increase their credit score. It is important to remember that not all credit reporting agencies will use your rental information to determine your credit score.