Article courtesy of Samantha Sharf, at Forbes. To read the full article, click the link below!
In 2017 Americans learned to expect the unexpected, whether it be politics, weather or housing. Driven by record low inventory, little about the housing market went as forecast last year. “We thought there would be some things to take the pressure off,” reflects Skylar Olsen, senior economist at home search site Zillow. Interest rates would rise. Construction would pick up. Price growth would moderate. “That did not happen at any impactful level.”
Instead the market got hotter: inventory tightened, prices rose, mortgage rates barely budged and, though new home construction picked up at the end of the year, it was not at the starter price points where new inventory is needed most. Like the soaring stock market, the housing market often seemed disconnected from the tumult in Washington and natural disasters elsewhere. Observes Javier Vivas, director of economic research for Realtor.com: “We saw the economic growth and the economic momentum function as an override for a lot of external forces.”
With few clear signs of supply relief and the impact of the new tax law still being digested, reading the housing tea leaves is particularly challenging this year, but here are six things experts expect to happen:
The pace of sales will slow early in the year—but not for long.
Several provisions in the tax bill signed into law by President Trump last month will directly impact housing. These include changes to the mortgage interest deduction and to property tax deductions. Other changes will impact how much money people have, requiring decisions on how to spend it. Experts anticipate households will take some time to do the math on how the tax plan impacts them and the value of their home before making any big moves. Nevertheless underlying demand should remain strong after the best year for wage growth since the recession. Pent up demand from renters who have been unable to find suitable homes to buy also means the lid won’t stay on for long.