What lies ahead for the local housing market in 2018? We sat down with Windermere Chief Economist Matthew Gardner to get his thoughts. Here are some highlights:
Home prices will continue to increase, but at a slower pace
The strong local economy, high demand and very low inventory will continue to boost home values in 2018, according to Gardner. However, he believes that the double-digit growth of 2017 will moderate, and predicts home prices in King County will rise by 8.5% in the new year.
Mortgage interest rates will rise slightly.
Gardner admits that interest rates continue to baffle forecasters. The rise that many economists have predicted the past few years has yet to materialize. His forecast for 2018 sees interest rates increasing modestly to an average of 4.4% for a conventional 30-year fixed-rate mortgage.
More Millennials will enter the housing market.
Despite the relatively high cost of homes in our region, Gardner expects more Millennials to buy homes in 2018. They are getting older and more established in their careers, enabling them to save more money for a down payment. Many are also having children and are looking for a place to raise their family.
The tax reform bill will have a limited effect on our housing market.
The recent changes to the income tax structure will have an impact on homeowners, but Gardner does not believe that impact will be significant here.
The mortgage interest rate deduction will be capped at $750,000 – down from $1,000,000. But according to Gardner, just 4% of the mortgages in King County exceeded $750,000 in 2017. Most buyers of more expensive homes have been making larger down payments, or buying homes for cash.
Since the $1,000,000 mortgage deduction cap is grandfathered in for those who have already purchased a home, some homeowners may opt to stay put rather than move. That could result in fewer homes being placed on the market.
- The tax bill eliminates the deduction for interest on home equity loans. This is bound to slow down the trend of homeowners choosing to remodel their home rather than trying to find a new home our inventory-deprived market.
The increase in home prices may moderate, but inventory will still be very tight. 2018 is on track to be a strong seller’s market.
It seems like a tale as old as time. Many people are wanting to move to Seattle, but no one else really wants to leave. This leads to our favorite real estate headline for the last several years: inventory is low, prices are rising.
Seattle-based Zillow recently analyzed searches on their website and compared the location of its users with the cities in which they are searching. They used this information to create a chart of the most desirable cities based on their popularity with outsiders and current residents.
Unsurprisingly, Seattle ranked high in the category “Residents Want To Stay, Outsiders Want In” with about 70 percent of current residents continuing to search here.
What does this mean for the Eastside?
It isn’t just our breathtaking scenery and active lifestyles making the Seattle area’s population grow by nearly 1,000 residents per week over the last several years. Our strong economy and plentiful technology jobs are enticing newcomers. Some areas on the Eastside even have higher home prices and carry some pretty stiff competition.
If you are ready to buy or sell your home, make sure you get in touch with a Windermere Real Estate broker on the Eastside. Our expertise can help you purchase your dream home, or sell your current home at top dollar.
Thinking of listing your home? Sellers today stand to benefit from a perfect storm of market conditions that are delivering the greatest possible return on investment.
- Record-Low Inventory: Fewer than 1,600 single-family homes were on the market in King County last month, an all-time low.
- Record High Prices: Prices are at historic highs, and are rising faster than anywhere else in the country.
So, why not just wait and see if prices go even higher?
Just like with the stock market, it’s impossible to time the housing market. However, experts have predicted price increases to slow this year, and prices here are already showing signs of moderating.
In addition, interest rates are expected to go up this year. A majority of the members of the Federal Reserve’s rate-setting board predict there will be three more increases coming in 2017. These increases will cause mortgage rates to rise, which means buyers will only qualify for less expensive homes. This reduced purchasing power starts slowing buyer demand.
It’s the perfect time to list your home. Are ready to get started?
A Windermere Real Estate broker can prepare a valuation of your home based on current market conditions, walk you through the process, and answer any questions you may have. Contact your broker today to get started.