Real Estate 2018: What to Expect

Real Estate 2018: What to Expect

Vancouver Island Real Estate Board News

Sales are down but prices continue to rise due to limited inventory

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National Perspective

As we head into a new year, the most common question we receive is, “What’s the outlook for real estate in 2018?”

According to CREA (Canadian Real Estate Association) the national forecast for sales and average price has been lowered. National sales activity is projected to decline by 7.1% to 479,400 units in 2018. The decline reflects weaker sales in B.C. and Ontario, amid heightened housing market uncertainty caused by provincial policy measures, high home prices, ongoing supply shortages and tightening mortgage stress tests as interest rates rise.

 


NEW CONSTRUCTION WILL MAKE REAL ESTATE MORE ACCESSIBLE

Lack of inventory in the housing market has been a primary impediment to homeownership.  Ten years ago, the problem in the housing market was lack of buyers, The lack of inventory has pushed up home prices.

Limited inventory will remain a consistent problem … growth in home sales will be primarily driven by new home sales, which should continue to grind higher with single-family construction.

If you’ve been frustrated by lack of inventory in the past, 2018 may bring new opportunities for you to find a budget-friendly home that suits your needs. Give me a call to discuss options for new construction in our area.

MILLENNIALS ON THE MOVE

Rising home prices, a sluggish job market, and an increase in student loan debt made homeownership largely unattainable for many millennials in past years. However, there’s significant evidence that this trend is turning around. For the fourth year a row, the U.S. based National Association of Realtors’ 2017 Home Buyer and Seller Generational Trends survey found that millennials were the largest group of homebuyers.7

As millennials age, they are settling down and having families, which has prompted an increasing demand for larger but affordable homes.

 

INTEREST RATES WILL RISE

When CREA previously published its forecast in December 2017, housing markets were being affected by provincial policy measures in B.C. and Ontario, and by the stress test on mortgage applications involving less than a 20% down payment. Rising interest rates and the announcement of a stress test on mortgage applications involving more than a 20% down payment set to take effect starting in January 2018 were also factors.

Since then, more provincial housing policy measures have been announced to further cool housing markets in B.C.  Additionally, interest rates have risen further and the stress test on mortgage applications involving more than a 20% down payment has come into effect.

Interest rates are widely expected to rise further this year. Higher interest rates make mortgage stress tests a more difficult hurdle for homebuyers that need mortgage financing.

Some home buyers will likely to stay on the sidelines amid heightened housing market uncertainty and continue saving a larger down payment before purchasing, resulting in lower sales in the first half of 2018 followed by a modest rebound in the second half of 2018 as housing market uncertainty fades.

 

What does it mean for you? If you’re in the market to buy, act now. Rising interest rates will decrease your purchasing power, so act quickly before interest rates go up. Give me a call today to get your home search started.

 

2018 ACTION PLAN

If you plan to BUY this year: 

  1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
  2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? I can set up a customized search that meets your criteria to help you find the perfect home for you.
  3. Come to our office. The buying process can be tricky. Id love to guide you through it. I can help you find a home that fits your needs and budget, all at no cost to you. Give me a call to schedule an appointment today!

 

If you plan to SELL this year:

  1. Call me for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it’ll also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property … and it will help us price your home correctly once you’re ready to list.
  2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. I can help you determine which ones are worth the time and expense to deliver maximum results.
  3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage … and get you one step closer to moving when the time comes!


WE’RE HERE TO HELP

 While national real estate numbers and predictions can provide a “big-picture” outlook for the year, real estate is local. And as a local market expert, Ican guide you through the ins and outs of our market, and the local issues that are likely to drive home values in your particular neighborhood. If you have specific questions, or would like more information about where I see real estate headed in our area, please give me a call! I’d love to discuss how issues here at home are likely to impact your desire to buy or a sell a home this year.

 

Sources:

  1. Canadian Real Estate Association