2017 was a great year to purchase and sell homes. Will 2018 be great too? The trajectory is aimed toward a positive outlook for 2018 with home prices still increasing, but likely at a slower pace. New builds will be made for the lower range homeowners in mind. Existing borrowers will refinance and remodel. More and more millennials are buying, which will put even more pressure on the already small inventory.
Home prices grew at a record breaking record of 6.9% in 2017. While they’re expected to slow down in 2018, they are still expected to be higher than the “normal” annual appreciation of 3% at 4.1%. This especially good for older homeowners looking to downsize.
Freddie Mac forecasts new home sales to drive home sales. With the aging population and existing home inventory problem, Freddie Mac estimates new home sales to increase by 2%. For the Denver market, specifically, we’re seeing more and more people buying and building on the outskirts of the Denver metro area. Castle Rock, Parker, Aurora, and even as far as Elizabeth and Colorado Springs are seeing an increase of home buyership as people look for affordable housing. Homebuyers and even renters are opting for a longer commute to get a bigger home for their money.
With mortgage rates still low, homeowners will opt to refinance and remodel over upgrading homes. Even though home prices would mean a significant return on investment for most homeowners, at least those who have been in their homes for 10+ years, people are staying put. On the other hand, Freddie Mac predicts an overall decline in refinancing.
Millennials are transitioning from their parents’ basements to the housing market. With the job market growth, millennials are finding jobs right out of college, paying off student loan debt, and saving for a down payment. 2018 will bring many more millennials into the housing market, which will drive design. Technology has been a way of life for them, thus, ‘smart home’ technology will be more of a factor in new home builds.
Freddie Mac source: