Loan Officer | NMLS #834554
Branch NMLS #1607863
Posted On January 02, 2018
Heading into 2018, the housing outlook is positive. Home price appreciation is expected to slow down, construction is picking up, and homeowners will have more equity to access for home improvement and debt repayment. The Federal Open Market Committee expects two to three more rate hikes, but mortgage rates are still historically low.
First-time home buyers have been hit especially hard by home price appreciation, as renters struggle to save for larger and larger down payments. The Federal Housing Finance Agency reports home prices increased 6.3% in 2016 and are on track to hit a similar pace in 2017. However, the median forecast drops to a 4.1% annual increase in 2018. As construction picks up, new for sale inventory is increasing.
New home sales are expected to rise a median of 7% to a level of 653,500 and existing home sales are also expected to rise a median of 2.5% to a level of 5.6 million. Realtor.com chief economist Danielle Hale expects Southern markets to see the most sales growth, particularly in markets like Dallas, TX, Tulsa, OK, Little Rock, AR, and Charlotte, NC. Even as inventory increases, home prices and mortgage rates will still gradually go up, hurting affordability.
Home price appreciation is good news for homeowners, as their equity increases. Consumer credit reporting agency TransUnion predicts 1.6 million homeowners will take out Home Equity Lines of Credit in 2018, and 10 million homeowners will take out HELOCs from 2018 to 2022. 67% of American homeowners have enough equity to get a HELOC and 80% of that segment have high credit scores. HELOCs allow homeowners to use their equity for other purposes like paying down debt or making improvements on their homes.
With economic momentum building into 2018, housing professionals expect another strong year. Despite some affordability and availability problems, unemployment is at a 17-year-low and overall consumer credit is improving. As first-time home buyers enter the market, competition is expected to increase.