Local and National Real Estate Market Predictions for 2018
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What to look for:
1) A Balanced MarketNationally, home sales reach equilibrium, although some markets will remain hot. High demand and low supply in many regions spurred the upward trend in home prices, meaning the market has favored buyers. The National Association of Realtors’ (NAR) chief economist Lawrence Yun predicted in a release that, “existing home sales are projected to be unchanged at about 5.6 million after rising 6.3 percent, 3.8 percent and 2.7 percent, respectively, each of the past three years ending in 2017. The median home price will edge up about 2 percent to $253,000 after averaging 6 percent jumps since 2015.”
In the coming year, Sarasota real estate professionals expect the upward trend to continue, if at a modest pace. It’s unlikely the region will experience the record-setting sales and price jumps as two years ago, but continued income growth and interest in the area will drive growth.
2) Millennials Buy More HomesMore millennials are finally in a position to move from renting to home ownership. Lower interest rates are helping millennials take this step in markets across the nation. Healthy job and income growth mean this generation is seeking starter homes, driving demand in this market bracket.
3)Tax Cut ImplicationsWith sweeping changes to the tax codes, especially on pass-through income, homeowners in higher income brackets may opt to hold onto their properties. The mortgage interest rate deduction has also been lessened to $750,000, another strike against the luxury home market. However, the new package also caps the deduction for property, state, and local income taxes at $10,000. Taken all together, this means moving to a state with lower taxes and home prices–like Florida–could be an attractive option for baby boomers, retirees, and real estate investors in the Northeast.
4) Interest Rate HikesThe Federal Reserve is on track to continue raising the benchmark rate, having done so three times in 2017. As of January 2018, the rate hovers between 1.25 to 1.5 percent. The reserve will likely hike rates three times during the year, but the overall rate will likely remain low, with a total 0.75 percent increase expected. Homeowners with adjustable rate mortgages might benefit from refinancing now rather than waiting months into the new year.
5) Rental Home Regulation
From time to time, the Florida legislature tackles regulation of rental properties. Right now rental properties must be licensed by the state, but depending on location may also be subject to special city or county rules. Local Sarasota state representative Greg Steube again filed legislation that shifts vacation rental regulation to the state and away from local bodies, aimed to have standardized framework across the state. With a large number of vacation rental properties in the Sarasota area, owners need to stay abreast of legislative developments concerning their income-producting properties.