It’s the time of year when predictions start coming in for the next year. For the US property market in 2018, they include an even tighter supply, higher property prices and a nationwide trend for refurbishments.
Fewer homes for sales
One of the largest property portals in the US has recently released their predictions for the main trends in the US property market in 2018. The tendency that will drive the market will continue to be lack of supply.
Low inventory has characterised the market throughout 2017 and will be the main engine behind it next year too. The current supply has been likened to a “game of musical chairs”. The report claims that “nobody wants to stand up from the home they’re currently living in and list it for sale, for fear that they won’t be able to find another home to buy”.
And supply levels are truly low. The report states that the current market has 12% fewer homes for sale than a year ago. In some parts of the US, inventory stands at less than four months’ supply. This is the case in Florida, for example, where at the end of Q3, the supply of single family homes had dropped to just 3.8 months.
Higher prices and affordability issues
Another characteristic of the US property market in 2018 will be rising prices. Based on their Home Price Expectations survey, the property portal predicts a hike of 4.1% over the year. While the expected rise is above the average annual appreciation of 3%, it’s below this year’s increase of 6.9%.
Along with even higher prices comes less affordability. In September, 51% of properties on the market in the US were in the top one-third of most expensive homes. This places over half the supply out of the reach of many buyers, particularly those looking to buy their first home.
Refurb rather than sell
Another major trend predicted for the US property market in 2018 will be a preference for home refurbishment. Faced with mounting prices and less choice, homeowners may opt to extend or refurb their current homes. This decision “may worsen the inventory crisis”.
High land prices and restrictions on zoning mean that construction companies will choose to build affordable homes in the suburbs rather than city centres. As a result, first-time buyers and millennials “will flock” to the outskirts of major metro areas.