It's the season for the loaded question that is on all of my homebuyers and sellers' minds, “What are the 2018 trends that we will see in the housing market?”. Our clients count on My NC Homes to know the upcoming market trends for the upcoming year and 2018 is no different. It is impossible for anyone to really “know” what the future holds, but with over 50 years of experience, we can read the market maps to better understand the indicators that guide our clients to make a better decisions.
2018 Real Estate Trends in The Triangle Region
In 2017, many of the Triangle homebuyers found themselves frustrated with the hot” sellers market around the Triangle. All around the area competitive offers on homes were turned away as they were edged out with more competitive offers. We saw homes that were listed and under contract the first day and sometimes within hours of hitting the market!
Housing supply will begin to catch up to demand
Based on our research, 2018 will be a slight cooling of the “hot sellers market” trend as the year rolls along. Between new housing starts and Boomers rightsizing; we anticipate that home inventory throughout the Triangle will begin to increase. In Durham alone, the inventory decreased 24.2% from November 2016 to November 2017. The Triangle average was less dramatic, but still saw a decrease by 12.6% (DurhamRealtors.org). Where should homebuyers still anticipate competition? Properly priced homes in desirable locations will likely continue to receive multiple offers.
New construction and development will continue to boom
Since the Great Recession new home construction has not been able to keep pace with the demand. In 2018 however, homebuyers in the Triangle should see an explosion of inventory. Local news outlet ABC11 reported the Development Services Department in Raleigh approved 279 subdivisions (4,438 homes) as of July 2017. The numbers are even more impressive in
the suburbs, including Apex (62 subdivisions, 7,851 homes) and Wake Forest (39 subdivisions, 6,766 homes). We suspect that many aging Boomers will list their homes for sale and look to purchase new more right-sized construction.
While some of the new construction is residential rental properties, there is a high demand for condo ownership in the downtown areas. The Brannan and One City Center in downtown Durham have already sold out and The Bartlett is planning to complete by the summer of 2019 (Business Journal).
More clues for 2018 Trends for Homebuyers and Sellers
New construction that leads to an increase in inventory is one of the hottest 2018 trends that are likely to most drastically shape the real estate landscape. Here are some other indicators that may have an impact on the real estate market in 2018:
Millenials and Boomers stabilize the market
Many experts anticipate a generational transition between the Boomers and Millennials. With a tight market for inventory, there is a lot of pressure on the Boomers to sell, according to gordcollins.com. Millennials will pick up most of the inventory and Generation Y will follow suit. They will make up a key part of the housing market through 2030. Another market impactor in the upcoming year is the group that survived the housing market crash and bankruptcy from seven years ago.
We are in a long cycle
According to PricewaterhouseCoopers Emerging Trends in Real Estate 2018 report, “We are in a long cycle, not in boom/bust. The key to the next few years is to expand horizons, market-by-market, property type-by-property type.” The article gives us a sense that the analysts behind the numbers are fairly confident the housing market is not unraveling. They carefully outline how the market is going through a cooling phase from an extreme “overheating” caused by many factors including the low-interest rates.
The developing Tax story
Undoubtedly, there are mixed reviews on the recently passed Tax Reform Bill. The debate will play out over the coming months but there are a few facts that we can consider. Under the new law, people applying for a new mortgage will be able to deduct interest on home loans only up to $750,000. That's down from the current threshold of $1 million. Existing mortgage holders won't see any change. Locally most buyers are unlikely to be impacted by this as the vast majority of sales here in the Triangle are below the $750,000 threshold.
Second, there will be a $10,000 deduction cap on state and local taxes, which include property taxes. (The IRS said people may be able to deduct their 2018 property taxes only if they were assessed and paid during 2017. Prepaying based on estimated assessments won't be allowed, Realtor.com). This will have an impact locally, but it's too early to predict with confidence exactly what this will be.
The new tax laws certainly have implications for Americans looking to buy expensive homes. However, only 94% of home-owning Americans have mortgages above $500,000. (Forbes) A more important factor to consider is mortgage rates. The Federal Reserve increased rates earlier in 2017. Bankers expect another 3 rate hikes in the coming year. With a growing national deficit, the Federal Reserve will likely pursue an aggressive alternative tax increase track.
Additional resources of interest:
- Retail and workplace transformation have an impact on urban housing markets and trends: https://www.curbed.com/2017/10/26/16554900/real-estate-trends-housing-affordability-urban-development
- Local Realtor's association is a helpful resource for reports, zoning, and more information about the Code of Ethics: http://www.durhamrealtors.org/market-tools/
The home buying and selling process goes through different stages that can seem difficult to navigate in a changing marketplace. Having a seasoned professional to guide you through it will ensure you have a resource to answer questions and look out for your best interests. The team at My NC Homes has many years of experience in new home construction, real estate, and importantly knows the Triangle. We invite you to visit our Home Buyer's or Home Seller's guide and tools page to learn more.
Co-authored by 3 Bossy Bees.
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