LOCAL RECORDS OFFICE – A panel of experts share insights of what it is expected in 2018 housing market and analysts share their thoughts on seeing a gradual increase, with a little more balance, says, Local Records Office. Though Mark Fleming, chief economist at First American Financial Corporation states it is expected to see a rise of millennial first-time homebuyers, and “it’s likely to be a successful year” while other economists believe the inventory count could increase.
The C.A.R. forecast sees a modest gain in single-family home sales with the expected economy growing, as “solid job growth and favorable interest rates will drive a strong demand for housing next year,” said Local Records Office. “However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market.”
Jerry Nickelsburg, the director of the UCLA Anderson Forecast, explains that when you have increased in employment, you have increased in household formation and that increases demand in housing.
One of the biggest issues of the real estate market Matthew Gardner adds, “We continue to be stuck in a ‘chicken-and-egg’ situation, whereby would-be sellers know that they will likely have no problem selling their existing home, but they will not list until they have found somewhere to buy, and if they can’t find somewhere to buy, they won’t list.”
With tight inventory and fierce competition driving up home prices, 2018 is expected towards leading lower affordability and a weaker sales growth. And the rise of demand and the shortage of homes will create an upward price pressure. Some also are concerned by the new tax overhaul slowing down home sales and sap prices.
Homeownership is becoming less appealing, as tax law changes homebuyer’s plans in purchasing a home
As you can expect higher property taxes in California due to the tax reform, and the restriction limits of deducting state and local taxes on federal returns to a limit of $10,000, provisions in the “tax cuts and jobs act” will offset rising property values threatening homeownership to be less appealing and the incentive to gain homeownership will disappear.
The tax plan decreases incentives for homeownership and particularly in California, Illinois, New York and New Jersey. On the flip side, the renters receiving that tax cut will look further into building equity as a homeowner instead of flushing away their savings in rent. And buying remains a better long-term option.
Though the tax reform will especially hurt California; the C.A.R. Presidents Geoff Mcintosh states, “Limiting the mortgage interest deduction to $500,000 will no doubt hurt homeownership in states with high housing costs such as California.”
A majority of survey respondents – 83% told the Realtor.com their plans to purchase a home has changed and 46% said they were concerned or very concerned about the new measure, while 24% say they are positive, or very positive about it.
41% expressed disapproval of reduced caps on the property of sales taxes and mortgage interest payments, and 35% expressed negative feedback about the $750,000 limit on mortgage interest deductions, while 28% expressed being positive about it.
A majority expressed disapproval of the abolition of tax deductions for wildfire relief, hurricane and other losses of casualties. Also, a majority were feeling negative of raising the federal deficit by $1.5 trillion over the next 10 years.
Housing prices are expected to slow down in 2018
In 2018, price increases are expected to be moderate. By next November, the median house price is expected to increase to about $525,000.
Los Angeles will rise 3.1% according to MetroStudy. C.A.R reported L.A. County that the housing prices will rise up 3.9% by November 2018.
Low affordability will also be the main reason for it slowing down and it is expected that the 30-year fixed-rate mortgage will average from 4.3% to 4.6% in this next year, according to C.A.R., Chapman, and CoreLogic.