The 2018 Real Estate Market is likely to see the continued pace that we saw in 2017, with a few changes. We have already begun to see an increase, locally, of inventory in the over $400k price range, and the National Association of Realtors has stated they are projecting to see a continued increase of inventory over $350k this Fall, which has not happened since 2015. Unfortunately, there will still be significant demand for starter homes as the first-time home market continues to recover.

The growth rate is also expected to slow, to 3.2% in 2018 from a rate of 5.5% in 2017. As we have seen this past year, the entry level home price rates have risen faster than the higher priced homes. This will continue as the market sees an increase in inventory over $350k.

Millennials will continue to drive the market in 2018. predicts 43% of homes sold in 2018 will be to this group of buyers, up from 40% in 2017. Many of these buyers have already gotten into the entry level tier, and will begin to move up.

Investors are likely to continue to see strong competition for foreclosures, as the numbers of Bank-owned homes continues to dwindle, however, it should be noted that The University Financial Associates (UFA) Default Risk Index, which measures the risk of defaults on newly originated non-prime mortgages, climbed seven points between Q4 2017 and Q1 2018, hitting 108. This means the default of home mortgages is expected to be about 8% higher than those seen in the 1990s. And the January Performance Mortgage data from Black Knight Inc shows Mortgage delinquency rates 1.6% higher than in January 2017, and followed up by pointing out the 2017 hurricane season as a reason for the increase in delinquency with the top 5 states in terms of 90+ days delinquent percentage being Florida (3.96 percent), Mississippi (3.37 percent), Louisiana (2.68 percent), Texas (2.33 percent), and Alabama (2.13 percent).

And finally, the wild card; Tax Reform. While the State of Maryland will not see full benefits to some of the tax savings, due to Maryland being a high tax State, there is still enough benefit to buying a home as compared to renting the same home, to make it beneficial to home buyers, particularly in Southern Maryland where buying a home could save a home buyer thousands of dollars a year compared to renting. And there is still the mortgage interest deduction keeping that prospect attractive.

If you or someone you know is considering buying a home, please call DeHanas Real Estate Services at 301-870-1717. DeHanas Real Estate Services offers free buyer consultations, and can even help point you in the right direction for credit repair and understanding the financial preparations in buying a home. DeHanas Real Estate Services is locally owned and operated, licensed in Maryland, Washington DC and Virginia.