Housing-News-Report-January-2018

HOUSINGNEWS REPORT

8 ECONOMISTS PREDICT 2018 HOUSING MARKET TRENDS

VILLACORTA : One of the biggest market trends for 2018 will be lack of inventory, both new and existing, in many markets around the country. The inventory shortage is directly related to affordability issues that came into focus this year and show no signs of subsiding. Particularly in markets with strong job opportunities, lack of inventory is creating upward price pressure that is pricing out many entry-level home shoppers. As a result of rapidly increasing home prices in these markets, many homeowners are staying put as they slowly emerge from negative equity positions. The increasing homeownership tenure is now over eight years (compared to historical norms of four years), further exacerbating the inventory and affordability problems. As this trend unfolds in unique local markets around the country, look for pockets of price appreciation (and, more specifically, price depreciation) as segments of the market way beyond long-run norms revert back to historic levels. MUOIO : As we expected in 2017, inventory should remain the most important housing market trend in 2018. With homeownership tenure on the rise and homebuilders facing challenges with construction costs, even an uptick in inventory across 2018 will not provide much relief to the current shortage. A healthy labor market should continue to stoke housing demand, and as a result tight inventory levels will continue to limit sales growth and fuel further price

all regions of the country; rather they’re currently drawn to less expensive markets, such as North Dakota, Ohio and Maryland. For the coming year, I believe millennial buyers will continue to be one of the biggest influencers in housing. I also believe that they will begin buying in more expensive markets. That’s because millennials are getting older and further into their careers, enabling them to save more money and raise their credit profiles.

gains, bringing affordability concerns into focus. In addition to prices and sales, inventory will ultimately continue to impact homeownership rates, first-time buyers, and the ability for a key millennial segment to enter the housing market. MCLAUGHLIN : We predict that the homeownership rate will continue to climb in 2018, with homeownership outpacing renting for the indefinite future. However, we don’t expect this increase to come quickly, as low inventory, slow wage growth, and expensive starter homes in many of our largest markets present strong headwinds for those looking to transition into homeownership. Overall, these broad trends are important, since strong renter household formation is one of the reasons why the homeownership rate dropped precipitously after the onset of the Great Recession. The fact that 2017 brought three consecutive quarters where owner households outpaced renters is a strong sign this trend is reversing. KLEINHENZ : New home construction will continue to increase in 2018, which is needed to accommodate continuing growth in the number of U.S. households. GARDNER : Last year I predicted that 2017’s big story would be millennial buyers. For the most part, my forecast was accurate with first-time buyers making up 34 percent of all home purchases so far this year. However, they are not buying across

“Inventory should remain the most important housing market trend in 2018.” — MUOIO “We predict that the homeownership rate will continue to climb in 2018.” — MCLAUGHLIN “New home construction will continue to increase in 2018, which is

needed….” — KLEINHENZ

“I believe millennial buyers will continue to be one of the biggest influencers in

housing.” — GARDNER

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JANUARY 2018 | ATTOM DATA SOLUTIONS

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