RISMedia's Real Estate Magazine

JAN 2018

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/918036

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Page 33 of 110

RISMedia's REAL ESTATE January 2018 29 Zillow's 2017 Q4 Home Price Expec- tations Survey revealed that experts are anticipating a 4.1 percent hike in the new year, up from the 3 percent they forecasted a year ago. Over 100 experts, including economists, par- ticipated in the survey. Their reasoning? Home-building has not panned out as planned—yet. "The American labor market is stronger than it's been in decades, and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes," says Aaron Terrazas, senior econo- mist at Zillow. "Home-building has not kept pace with this surge in demand and remains well below historical norms. We don't expect that these demand-supply imbal- ances will fundamentally shift in 2018. Demand will continue to grow and, though supply should increase somewhat, we still won't build enough new homes to meet this demand, contributing to higher prices." Less than 20 percent of experts forecast home-building to pick up this year, the survey shows. Approxi- mately 313,000 new homes were on the market in October 2017, representing 4.9 months supply, ac- cording to the U.S. Census Bureau. Entry-level homes, especially, are scarce—down 20.4 percent year- over-year over the summer, reports Trulia. Additionally, experts foresee in- creasing mortgage rates, with the 30-year, fixed rate ranging anywhere from 4.28 to 4.7 percent. Currently (at press time), the 30-year averages 3.9 percent, according to Freddie Mac. "Higher mortgage rates will eat into buyers' budgets, putting even more price pressure on the most af- fordable homes for sale," Terrazas says. "Unless there is a fundamen- tal shift in the number and type of homes for sale, this is the new nor- mal of the American housing market." One factor in the health of the housing market is the homeowner- ship rate; experts predict it, too, will rise, though slightly, to 64 percent. Beyond 2018, analysts are divided. "Our most optimistic group of ex- perts projects average annual home value appreciation of almost 5 per- cent annually through the five-year period ending in 2022, while the most pessimistic group expects an average annual rate of just 1.4 per- cent," said Terry Loebs, founder of Pulsenomics, which conducted the survey in conjunction with Zillow, at press time. "I don't foresee a stron- ger consensus emerging until we have greater clarity concerning tax reform and the pace of entry-level home-building." RE For more information, please visit www.zillow.com. Suzanne De Vita is RISMedia's online news editor. Email her your real estate news ideas at sdevita@rismedia.com. Housing in 2018: Where Are Home Values Headed? A nalysts are expecting even higher home prices in 2018 than originally projected, according to recent research. By Suzanne De Vita

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