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The outlook for 2018 is for continued home value and price increases at a rate of about 3 to 4%. That’s good and bad news.
Good news for homeowners who will see increased equity which they can tap for other purposes or use toward the purchase a new home at a higher value. Of course, that is as long as they can afford the increased mortgage payment. Also, good news for Realtors and lenders as with higher prices comes bigger commissions and loan amounts.
The bad news is that the higher home values/prices are the result of a shortage of supply of homes for sale. This may produce fewer home sales in 2108, which is not so good for lenders or Realtors.
Lenders may make up some of the lost business in refi’s and HELOC’s but, with rates projected to rise, these may diminish as well.
Hopefully, builders can help by bringing more reasonably priced new homes to the market earlier to offset some of the shortage. This increase may better balance home supply and demand, and help to stabilize home prices. This will increase opportunities for all.
According to some, the new tax rules will make housing less attractive. That view is not shared by all. Many believe the tax changes will have a minimal impact on home sales if any at all.
Most people don’t buy a home for the tax write off, although in some states it may make the home more affordable. This will find its way into the home’s value when priced for sale.
In the end, it’s all about supply versus demand. With the economy improving, the resulting employment growth, wage growth, and a tax cut, consumers will have more money to put into housing.
2018 is also projected to be the year the Millennials enter the housing market. This creates more buyers for fewer homes. High demand with low supply; good for sellers, bad for buyers.
Home supply and demand is not something that lenders, nor Realtors can control. But, supply and demand are realities that they must face. What I’m saying is that it ain’t going to be easy doing business in 2018!
If you are going to do business, you must be properly positioned and prepared. The minute you start to whine or complain, you’ll be in trouble. You need to be well prepared to compete. No way to sugar coat it, it’s going to be tough.
Are you ready? Do you have a plan? Are you properly staffed? How will you generate new business, control expenses, and ensure loan quality an compliance? We’re on the doorstep of 2018 and the beginning of the rest of your career in mortgage lending.
