Are you getting ready to buy or sell a home in 2018? Well, there’s good news and bad news when it comes to real estate trends this year. Based on recent trends and events, some predictions have been made about what to expect.
First, the good news: Home sales are expected to stay hot through next year, and sellers are in a position to unload their homes at a profit.
Now, the bad news: Demand far exceeds supply, and buyers will have to be competitive and motivated to snatch a home this year.
As with any year, there are ups and downs in the land of real estate. Here’s some tips on how to stay sane during your journey.
Home sales are expected to soar & you might have to compromise on what you want. (Save your tears, it’s not really that bad.)
With homes continuing to fly off the market, buyers might have to compromise slightly on their list of “must-haves,” like favorite neighborhood, commute time, price, and size of home. If you’re planning to buy a new home in 2018, give yourself a competitive advantage with the following tips:
Get your financing in order. Seriously. If you’re looking to finance, get pre-approved for a 15-year fixed-rate mortgage. When sellers review your offer, a pre-approval will show them you’re a serious buyer because you and your lender have already started the mortgage process.
Save a chunk of change. Plan to put at least 10% down on your new home at closing. The more you can put down, the less money you’ll need to finance, which adds up to a lower mortgage payment each month. Plus, the more money you bring to the table, the more serious you look to the seller.
Know what you want in a home. Knowing what you want in a home is half the battle in finding the right place. If you’re buying a home with your spouse, make separate lists of must-haves and compare. He wants a man-cave and you want a craft room? Fine. But figure out if you can have both of these spaces or if you can combine a large space into both things. Once you’re on the same page about what you’re looking for, share the list with your real estate agent and use those criteria as the foundation of your home search.
Hire the best agent possible. In a hot market, your agent could make or break a deal. You’ll want a seasoned agent who has a great reputation in the real estate community. The right agent will answer questions you didn’t even know you had about the buying process. You’ll need an expert negotiator who also knows how to manage the details of paperwork and closing, so stick with a pro. STAgency has multiple experienced, talented agents who will work with you to help you find the home you’ve been looking for.
Home prices will rise…slightly.
According to the Home Buying Institute (HBI), housing market forecasts through 2018 suggest home prices in the U.S. could rise somewhere between 3% and 5%. So as those home prices increase, buyers need to evaluate just how much house they can actually afford (real life, people – not in la la land), and stick to those boundaries. Don’t let the pressure of the hot housing market make you pull the trigger sooner than is financially reasonable for you.
However, if the housing market is more expensive than your budget allows, consider these options:
Save longer. Even if you’re debt-free with an emergency fund in place (which all of us are, right?), you couldn’t live in an area where your income truly can’t support the price of a mortgage. Don’t sweat it. Renting helps you build up your savings—and patience. Waiting may be your smartest move if you want to buy a home in an expensive market.
Reset your expectations. As home prices continue to rise, you might have to revisit your criteria. It might be hard to give up a luxury master bath or a gourmet kitchen (who really needs an eight-burner stove, anyway?), but bypassing those extras will be worth it to avoid getting in over your head. Look for the least expensive home in the best neighborhood you can afford and upgrade over the years to create your dream home. Move-in ready isn’t always the best option.
Broaden your search. Home prices are usually higher the closer you are to a city. To compensate for this, try looking at houses just outside the city. An expert real estate agent will help you determine an area of town that could fit your budget and lifestyle.
Interest Rates Will Increase. Whoo.
I hate to be the bearer of bad news, but it’s true. Interest rates have risen slightly thanks to three small rate increases by the Federal Reserve, and the pace is likely to continue. The Mortgage Bankers Association expects the interest rate on a 30-year fixed loan to reach 5% during 2018 – the highest level since February 2011.
St. Louis Is A Balanced Market.
What I mean by that is that at the moment, conditions don’t favor the buyers or the sellers. We’re pretty much neutral. Over the course of three years, homes in the St. Louis area gained enough value to pull them out of a period of post-recession price weakness. The St. Louis housing market currently boasts a current median home price of $145,000.
The Outlook For Our Housing Market Is Bright.
St. Louis is doing pretty great as far as our housing market goes. According to US News, Missouri is ranked #10 on the list for the most affordable places to live. Taking into consideration both the average household income and the cost of homes in the area, St. Louis continues to be one of the most affordable markets in the country. In fact, our housing affordability has dropped below historical levels. Whereas homeowners in the area were accustomed to spending 9.6% of their income on their monthly mortgage, that ratio has now dropped to 7.5%. Compared to other markets around the country, St. Louis is more than twice as affordable than the average home in the United States.
All things considered, St. Louis housing market has maintained a relatively steady presence which is good news for sellers and for buyers. While the job market has yet to drive supply and demand, it is trending in the right direction. Perhaps even more importantly, the predicted rate of appreciation should boost the entire housing sector, at least enough to get it on track. That said, homes in the area are still very affordable and investors should be able to find the deals they are looking for. So don’t get discouraged if you don’t find your home the first time you look, or if you don’t get any offers the first day you list your house. Buying and selling take time and patience…and maybe a few cocktails along the way.
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