Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease next year as part of broad and continued market improvements.
The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is being predicted based on developments first detected by realtor.com® late this summer. The annual forecast, which is among the industry’s bellwethers in tracking and analyzing major trends in the housing market, also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress.
Next year will set the stage for a significant inflection point in the housing shortage. Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.
Realtor.com® Forecast for Key Housing Indicators
|Housing Indicator||Realtor.com® 2018 Forecast|
|Home price appreciation||3.2% increase, enabling a sales pickup|
|Mortgage rate||Average 4.6% throughout the year and reach 5.0% (30 year fixed) by the end|
|Existing home sales||2.5% growth, low inventory trend starts to reverse|
|Housing starts||3% growth in home starts; 7% growth in single family home starts|
|New home sales||Increase 7%|
|Home ownership rate||Stabilize at 63.9% after bottom in Q2-2016|
Five Housing Trends for 2018
- Inventory expected to begin to increase – In August, the U.S. housing market began to see a higher than normal month-over-month deceleration in inventory that has continued into fall. Based on this pattern, realtor.com® projects U.S. year-over-year inventory growth to tick up into positive territory by fall 2018, for the first time since 2015. Inventory declines are expected to decelerate slowly throughout the year, reaching a 4 percent year-over-year decline in March before increasing in early fall, after the peak home-buying months. Boston; Detroit; Kansas City, Mo.; Nashville; and Philadelphia are predicted to see inventory recover first. The majority of this growth is expected in the mid-to-upper tier price points, which includes U.S. homes priced above $350,000. Recovery for starter homes is expected to take longer because their levels were significantly depleted by first time buyers.
- Price appreciation expected to slow – Home prices are forecasted to slow to 3.2 percent growth year-over-year nationally, from an estimated increase of 5.5 percent in 2017. Most of the slowing will be felt in the higher-priced segment as more available inventory in this price range and a smaller pool of buyers forces sellers to price competitively. Entry-level homes will continue to see price gains due to the larger number of buyers that can afford them and more limited homes available for sale in this price range.
- Millennials anticipated to gain market share in all home price segments – Although millennials will continue to face challenges next year with rising interest rates and home prices, they are on track to gain mortgage market share in all price points, due to the sheer size of the generation. Millennials could reach 43 percent of home buyers taking out a mortgage by the end of 2018, up from an estimated 40 percent in 2017. With the largest cohort of millennial expected to turn 30 in 2020, their homeownership market share is only expected to increase.
Millennials are a driving force in today’s housing market. They already dominate lower price home mortgage and are getting close to overtaking older generations for mid- and upper-tier mortgages. While financially secure in general, their debt to income ratios have started to increase as they compete for higher priced homes.
- Southern markets predicted to lead in sales growth – Southern cities are anticipated to beat the national average in home sales growth in 2018 with Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C. leading the pack. Sales are expected to grow by 6 percent or more in these markets, compared with 2.5 percent nationally. The majority of this growth can be attributed to healthy building levels combating the housing shortage. With inventory growth just around the corner, these areas are primed for sales gains in years to come.
- Tax reform will be a major wildcard – At the time of this forecast, both the House and Senate had bills up for consideration, but neither had passed and their impact was not included in the forecast for 2018 sales and prices. Since then, the House has passed its tax bill and the Senate bill is likely to be voted on soon. While the ultimate impact of tax reform will depend on the details of the plan that is finally adopted, both versions include provisions that are likely to decrease incentives for mobility and reduce ownership tax benefits. On the flip side, some taxpayers, including renters, are likely to see tax cuts. While more disposable income for buyers is positive for housing, the loss of tax benefits for owners could lead to fewer sales and impact prices negatively over time with the largest impact on markets with higher prices and incomes.
Next year, home prices are anticipated to increase 3.2 percent year-over-year after finishing 2017 up 5.5 percent year-over-year. Existing home sales are forecast to increase 2.5 percent to 5.60 million homes due in-part to inventory increases, compared to 2017’s 0.4 percent increase or 5.47 million homes. Mortgage rates are expected to reach 5.0 percent by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization in the year ahead.
Top 100 Largest U.S. Metros Ranked by Forecasted 2018 Sales and Price Growth
|Rank||Metro||2018 Sales Growth||2018 Price Growth|
|1||Las Vegas-Henderson-Paradise, Nev.||4.90||6.90|
|2||Dallas-Fort Worth-Arlington, Texas||6.02||5.57|
|3||Deltona-Daytona Beach-Ormond Beach, Fla.||5.47||6.00|
|5||Lakeland-Winter Haven, Fla.||3.00||7.00|
|6||Salt Lake City, Utah||4.62||4.50|
|8||Colorado Springs, Colo||3.12||5.65|
|12||Spokane-Spokane Valley, Wash.||3.50||4.97|
|13||Austin-Round Rock, Texas||4.04||4.42|
|14||Miami-Fort Lauderdale-West Palm Beach, Fla.||3.10||5.28|
|15||Little Rock-North Little Rock-Conway, Ark.||7.00||1.37|
|20||Palm Bay-Melbourne-Titusville, Fla.||1.00||7.00|
|22||Durham-Chapel Hill, N.C.||5.18||2.62|
|25||North Port-Sarasota-Bradenton, Fla.||3.00||4.50|
|29||Tampa-St. Petersburg-Clearwater, Fla.||1.38||6.00|
|30||Grand Rapids-Wyoming, Mich.||2.96||4.25|
|31||Boise City, Idaho||2.00||5.00|
|32||San Jose-Sunnyvale-Santa Clara, Calif.||2.50||4.37|
|36||Houston-The Woodlands-Sugar Land, Texas||2.24||4.19|
|38||Riverside-San Bernardino-Ontario, Calif.||0.52||5.66|
|39||Buffalo-Cheektowaga-Niagara Falls, N.Y.||1.27||4.89|
|41||San Francisco-Oakland-Hayward, Calif.||0.94||5.14|
|44||Oxnard-Thousand Oaks-Ventura, Calif.||2.29||3.62|
|45||Augusta-Richmond County, Ga.-S.C.||2.50||3.34|
|47||San Diego-Carlsbad, Calif.||2.51||3.19|
|53||Charleston-North Charleston, S.C.||3.64||1.69|
|54||New York-Newark-Jersey City, N.Y.-N.J.-Pa.||1.16||4.15|
|56||Virginia Beach-Norfolk-Newport News, Va.-N.C.||1.40||3.82|
|59||Oklahoma City, Okla.||1.49||3.51|
|60||Portland-South Portland, Maine||5.00||0.00|
|61||Cape Coral-Fort Myers, Fla||1.00||3.99|
|62||El Paso, Texas||2.69||2.24|
|63||Minneapolis-St. Paul-Bloomington, Minn.-Wis.||0.00||4.93|
|67||Urban Honolulu, Hawaii||1.43||3.11|
|68||Des Moines-West Des Moines, Iowa||3.20||1.19|
|69||Greensboro-High Point, N.C.||1.34||2.97|
|71||New Orleans-Metairie, La.||2.00||2.24|
|78||Hartford-West Hartford-East Hartford, Conn.||4.46||-1.05|
|86||Milwaukee-Waukesha-West Allis, Wis.||0.00||2.48|
|88||New Haven-Milford, Conn.||2.96||-0.67|
|90||Omaha-Council Bluffs, Neb.-Iowa||0.00||2.18|
|91||Louisville/Jefferson County, Ky.-Ind.||-2.74||4.92|
|92||San Antonio-New Braunfels, Texas||0.37||1.52|
|94||Baton Rouge, La.||0.00||1.50|
|95||Atlanta-Sandy Springs-Roswell, Ga.||-1.88||2.99|
|96||Los Angeles-Long Beach-Anaheim, Calif.||-2.10||3.09|
|98||Kansas City, Mo-Kan.||0.00||-0.12|
|99||St. Louis, Mo.-Ill.||0.00||-2.83|
Realtor.com’s model-based forecast uses data on the housing market and overall economy to estimate values for these variables for the year ahead. The forecast result is a projection for annual total sales increase (total 2018 existing-home sales vs. 2017) and annual median price increase (2018 median existing-home sales price vs. 2017).
From Our Network
As a new homeowner, there’s a good chance you’ll have the opportunity to host the Christmas festivities — after all, everyone will want to see your new place, so you’ll want it to look its best for the holidays.
As a new homeowner, there’s a good chance you’ll have the opportunity to host the Christmas festivities — after all, everyone will want to see your new place, so you’ll want it to look its best for the holidays.
If you’re feeling overwhelmed, don’t worry: Follow this simple game plan for adding decor to your new home and helping your guests settle in comfortably.
Dress Your Home in Holiday Style
Focus on decorating a few key areas in your home to create a warm, festive vibe. You don’t need — or want — to have decorations in every corner. Using too much decor will make your rooms feel smaller. Instead, make a few spots gorgeous with these tips:
- Start at the front. Greet your guests with a beautiful wreath on the front door. Choose a pre-lit, battery-powered wreath so you don’t have to worry about extension cords — all you need to do is hang it up. Next, clean off your porch, clear your walkway, and add a holiday doormat. Finish with an easy “wow” factor, like a lawn figure of a nutcracker or snowman.
- Trim the tree. Don’t worry about getting the tree decorated before your guests arrive. Instead, host a tree-trimming party as a fun holiday activity. Assemble your tree or place it in a stand with water the day of the party. Add lights and set out your ornaments. Then, break out the cookies and eggnog and enjoy a night of decorating with your guests.
- Hang stockings with care. Decorate your mantel to make it a beautiful focal point. If you don’t have a fireplace, create your own focal point by using a bookcase or entertainment center. Bring the space to life by draping a pre-lit garland across it. Then, nestle a few similar items around the garland, such as a parade of nutcrackers, stuffed or wooden Santas, a Christmas village, a row of candles, or an arrangement of ornaments. Finish by hanging your stockings with stocking hooks or removable adhesive hooks.
- Add decorations. A few places need a holiday twist: the dining table, the coffee table, and the kitchen island. While you don’t need to cover every surface, you do want to spread some holiday cheer here and there. Try something simple and quick like a glass bowl filled with ornaments, a tall jar of candy canes, or a lovely red poinsettia.
Get Ready for Guests
Treat your guests like you’d want to be treated. Once you’ve spread Christmas cheer around the house, take a few steps to get ready for company.
- Clean the guest room. Declutter if you’ve put items in this rarely used room. Give it a good cleaning. If the bedding is clean but hasn’t been used in a while, toss the bedspread and pillow covers in the dryer on air-dry to fluff out any dust. Add a fun Christmas pillow to the bed, put out a basket of holiday goodies, and place a predecorated tabletop tree on the dresser.
- Set up the sofa. Don’t have a guest room? If you’re pulling out the air mattress or sleeper sofa, make sure you’ve got extra bedding on hand. Vacuum underneath the sofa cushions to remove any dust or crumbs. Set aside an area for your guests to put their belongings.
- Prep the bathroom. Arrange personal care items for your guests in a basket so that they’re easy to find. Show your guests where to locate clean towels and which towel bars they may use. Finally, add some festive elements to the bathroom with holiday-themed soap, air freshener, and hand towels.
Gathering with friends and family is the best part of the season. Once you’ve decorated the key places and made a welcoming spot for your guests, you can sit back and enjoy the most wonderful time of the year.
Meet you under the skylight, on the sofa, with a cream cheese brownie.
Fall and winter start cozy — who hasn’t used the colder temperatures as an excuse to binge-watch Netflix while swaddled in a couch blanket?
But come January, staying indoors can feel less like a treat and more like you’re living in a cave.
Here’s how to make your house lighter, brighter, and cheerier.
#1 Take the Screens Off Your Windows
You’ll get 30% more sunlight shining indoors without screens on your windows.
Here’s the best part: Sunlight warms your room and saves you money on your heating bill. It’s solar power — for you!
Be sure to store your screens in your garage or basement where they won’t get damaged. In the spring you’ll want to put them back on so you can keep that 30% of the sun out and run your cooling system less.
#2 Hang Outdoor String Lights Indoors
They don’t give off a lot of light, but they’re cheerful as heck.
Drape them around a window or a mantel, or hang a string of LED glimmer lights in a tall potted plant. They’ll add a layer of soft light to your room and remind you of fireflies, flip-flops, and patio parties.
#3 Steal a Little Swedish Chic
Scandinavians excel at making a home light and airy because they’ve got places where the sun doesn’t rise at all from November to January.
And you thought you had it bad.
To adapt to weeks and weeks of polar night, Swedes keep interiors pale to reflect and amplify light.
Think white walls, light woods for furniture and floors, and light upholstery. To get the look without getting rid of your dark furniture and floors, put white or light gray slipcovers on your sofa and chairs, and put down light-colored rugs.
The fastest way to bring a little Sweden into your room is to paint it. Try creamy white, pale blue, or dove gray.
#4 Change Your Bulbs
Replace those incandescent bulbs and their yellowy light with LEDs, which produce a brighter, whiter light.
But get your bright right:
- The higher the K rating on the bulb, the cooler and whiter its light.
- For cool, white light, opt for a bulb rated 3,500K to 4,100K.
- For blue-white light that’s closest to natural daylight, use a bulb between 5,000K and 6,500K.
Unless you live in Sweden (see above) you may want to leave the uber-high K bulbs for grow rooms and seasonal affective disorder therapy clinics — because they’re as bright as real sunlight on a hot summer day at noon. You’ll need sunglasses to read.
#5 Hang Mirrors
Make the most of that weak winter light by bouncing it around the room with mirrors.
If you don’t want the distraction of seeing your reflection all the time, use a large, convex one — also known as a fish-eye mirror. It will amplify light better than a flat one. Another option: Hang a gallery wall of small mirrors.
#6 Replace Heavy Curtains With Blinds or Roman Shades
Fabric curtains, while quite insulating, block light and make a room feel smaller and more cramped, especially if they’re a dark color or have a large print.
Try Roman shades or a simple valance paired with blinds to let in the maximum amount of natural light.
#7 Trim Branches and Bushes That Block Light
If you look out your windows and see the tops of your bushes, grab your pruning shears and get whacking.
You don’t want anything blocking that precious natural light. Same for tree limbs that may be arching down and blocking windows. Cut them off.
#8 Clean Your Windows
Dirty windows block a lot of natural light.
Admit it, yours are kind of cruddy because who remembers to block out an afternoon to clean the windows?
So get it on your list. Clean the glass inside at least once a month and the glass outside once a year. Your serotonin level will thank you.
#9 Swap Your Solid Front Door for One With Glass Inserts
A solid front door can make your house look and feel as dark as a dungeon.
Get rid of it and install a half-light or full-light door that lets the natural light stream in. For even more natural light, add glass sidelights and a glass transom.
The median cost of a new door is $2,000 for steel and $2,500 for fiberglass, before any extras, but a new door will add curb appeal.
Curb appeal equals higher resale value. And coming home in the evening to the warm glow of light radiating out the glass panels in your front door is an instant mood lifter.
#10 Add a Skylight
It’s the ultimate way to bring more natural light into your house. A window only catches sun for a couple of hours a day, but a skylight lets in the sun all day.
An indoor view of the sky makes deepest January more tolerable. And feeling the warmth of the sun on your skin, light streaming from above, is liberating. A skylight, installed, can cost as much as $3,000. A cheaper alternative is a tubular skylight, which costs around $1,000.
If you’re really good with tools, you can install a tubular skylight yourself. Don’t even think about installing a full-blown skylight yourself.
#11 Add Plants
Putting pots of plants around your room will remind you that spring and green will return.
Match plants to the amount of light you have, because dead and dying plants are depressing. Tropicals that thrive in indirect light are usually the best choice. If you have a sunny window you’ve got more plant options.
Bonus points for adding a plant that blooms in the winter, like a kaffir lily or anthurium.
#12 Celebrate National Cream Cheese Brownie Day
February 10 is National Cream Cheese Brownie Day. Really. Since February is when winter is feeling longer than a seminar on insurance underwriting, this is exactly when you need to make cream cheese brownies.
Chocolate won’t make the sun shine longer or your house brighter, but it will make you feel better because … endorphins. Besides, you spent a ton of money on that marble-topped kitchen island and those double ovens, so get baking.
Selling your home during the holidays is loaded with pros and cons, don’t make any mistake about it. If you ask a real estate agent, “Should I keep my home on the market over the holidays?” an agent will tell you, “Yes, absolutely, because then you know buyers are serious.” You know what I think about that? I’ll cut to the chase. It’s hogwash. If you don’t really have to sell between Thanksgiving and New Year’s, take your home off of the market, and enjoy some peace and quiet with your family.
Now, we can expect that hundreds of thousands of real estate agents want to argue. That’s because real estate agents always want your home on the market, regardless of whether it’s the right time to sell or not. Don’t blame them for being blindsided. It’s the way of the profession. If your home isn’t on the market during the holidays, agents won’t get a sale, and it’s as simple as that.
Not to mention, you might decide to list with another agent if the listing is canceled. That’s a real possibility for many agents, and it’s a real fear.
On the other hand, some people really do need to sell over the holidays. And some buyers do need to buy a home during the Christmas season, for example, and they don’t have any other alternative. But the fact remains there are not as many buyers in the market in December. Whether holiday season buyers are more “serious” than springtime buyers remains to be seen.
Reasons You Might Not Want to Sell Your Home Over the Holidays
- First time home buyers, not knowing any better, could think you are desperate. Buyers might try to negotiate.
- It’s inconvenient during the holidays to always be ready for home showing at a moment’s notice. Not everybody wants to keep the house spic and span when cooking, wrapping gifts, throwing parties.
- The offers you receive might be for less than list price, and you could receive a lowball offer.
- You’re appealing to a much smaller inventory of buyers who have very specific needs that your home might not match.
- It’s almost impossible to close a financed transaction in December if the offer is received mid-month. Buyers who want to close after the New Year will probably make offers in January.
- If you remove your home from the market, it can return as a brand new listing in January, thereby drawing more traffic because it’s fresh and exciting.
- Your agent might be on vacation in December and unavailable as the market moves into a seasonal slowdown. Other real estate professionals might be unavailable when you need them as well.
Some sellers insist on leaving their homes on the market, regardless, and that’s OK, too. The deciding factors depend on local custom, on what neighbors are doing and how real estate activity is viewed by others during the holiday season in your area. Every town is different. There are neighborhoods in California where, if you didn’t spot plastic Santa Clauses tied to palm trees, you might never know it was Christmas.
Still, reduced inventory over the holidays generally means less competition.
However, when the pool of buyers drops, the remaining balance of inventory might not make much difference. In parts of the country where it snows, buyers think twice about bundling up in heavy coats, boots and gloves to trudge through snow banks to go looking at homes when they’d rather be out shopping or staying at home in front of the fireplace.
Selling during the holidays tip: if you have a hard-to-sell home with drawbacks and defects, maybe a bad location, you might get shoved to the bottom of the showing list if you wait until Spring to sell your home. There might be too many other much nicer homes for sale at that time. Your hard-to-sell home might rise to the top when there are fewer homes for sale over the holidays.
If You Plan on Selling Your Home During the Holidays
Back off on the decorations.
Should you put out those blue and white candles and prominently display your menorah? What about hanging a wreath on your door or showcasing a Christmas tree in front of a window? What’s overdoing it? What’s not?
People carry biases and prejudices with them. Why give them more information than they need to know about you? By not decorating, you are protecting your privacyduring home showings. You are also making your home feel more spacious without blocking pathways. When buyers enter your home, you want them to imagine putting their own furniture in each room, making it theirs, and they can’t do that if your holiday decorations dominate the stage.
Too many decorations can be overwhelming and distracting. Don’t make the mistake of thinking buyers will “see past it” because they can’t. As an agent I know from Massachusetts says, “the eye buys.”
Holiday Decorating Compromises for Stubborn Sellers
If you decide you cannot live through a holiday seasons without decorating your home, at least keep the decorations to a minimum. Don’t block or cover up important selling features such as fireplace mantels, stairs, stained-glass windows. Consider hiring a home stager to do home staging with the buyer in mind.
- Tone down the size of tree. In place of a 10-foot tree, try decorating a table-top, four-foot version.
- Stack wrapped presents in a closet or in one corner.
- Use more splashes of red than green because red is an emotionally appealing color.
- Resist the urge to hang banners and use greenery instead such as evergreen or rosemary garlands.
- Display centerpieces made from pine cones or other wintry pieces of nature.
- Never leave candles burning unattended.
- Set a plate of cookies on the counter, next to festive paper napkins for guests.
- Simmer spicy apple cider on the stove, and set out cups and serving utensil.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
Often having a home in a big city means trading elements of suburban living, such as a cozy fireplace, for the excitement of the city of lights. With these fireplace alternatives, those living in the city can enjoy some decor radiance.
Fireplace alternatives let those living in the center of busy cities have the added warmth and ambiance provided by a hearth. Often having a home in a city like New York City means trading elements of suburban living, such as a cozy fireplace, for the excitement of the city of lights. With these fireplace alternatives, those living in the city can enjoy some decor radiance.
Your only electric fireplace option is no longer that ugly one that would be placed in the living room to decorate for the winter holiday season. Lovely electric fireplaces are now energy efficient with their forced air heaters and thermostat heat controls, and they come in various styles. Unique designs in traditional, contemporary, and a wood burning stove look are perfect for the NYC dweller looking to add not only the look of warmth but actual warmth to their home. Obviously being electric means that these type of fireplaces must be placed near an outlet.
With a free-standing, electric unit that resembles a wood stove and provides real heat, one can find a place to show it off while also removing the need for an ugly space heater. You even utilize contemporary wall-hung units and eliminate the need to find floor space in a smaller abode. Simply hang the fireplace on a wall near an outlet as if you are hanging artwork. There are even models dressed up to appear as art in a traditional frame. These safe electric fireplaces also give the added option to have the glow of the fire without the heat, for occasions when you may want the warmth of a flame but do not need the higher room temperature.
Unlike the electric fireplaces that require an outlet to plug in, gel fireplaces showcase a flame simply by lighting a flame, much like you would with a wood burning fireplace. Gel fuel fireplaces are perfect for the Big Apple abode as they provide a real fire in locations, such as apartment buildings, offices, and rentals, that you would normally not have the option of a traditional fireplace. The gel fireplace provides a real flame that flickers and crackles just as a wood burning or gas fireplace will have. Although not as warm as the electric versions, these also provide a little actual warmth from their flame. What is great about the gel option is that these fireplaces can be extremely portable and versatile.
These lovely gel fireplaces are available in many shapes and sizes, including the traditional looking fireplace as well as tabletop versions for small spaces, and there are wall-hung, contemporary versions. There are even coffee tables designed with gel fireplaces built into the center. As these do not plug in, they can be small and very easy to move from room to room. Light up the living room for entertaining and then move it to the bedroom for a romantic decor touch. The gel alcohol fuel is environmentally safe and friendly, and optional scents can be added to provide ambiance. Just make sure you have enough gel cans to replace as needed to keep your flame glowing. For those with actual wood burning fireplaces, you can easily convert it to use gel fuel by placing gel-fueled logs inside to light up instead of wood.
Was a 22-pound turkey over zealous? Try one of these creative Thanksgiving leftover ideas.
At a loss for what to do with the massive amounts of leftover turkey you have from Thanksgiving? Here are a few tasty ideas you might want to try out.
Here are some recipes to try out:
Rainy open houses and icy walkways make shopping for a home in winter less of a thrill than in the busy spring and summer months. But there are some distinct advantages (as well as some downsides) to shopping in the off season. If you’re thinking of buying a home in the next few months, you’re probably wondering what to expect from this year’s winter real estate market. One thing is for sure: Taking your high-season strategies into a low-season game will not serve you well. Here’s what you need to know to adjust your thinking to this winter’s realities.
1. It’s slim pickings out there.
There are fewer homes on the market in winter than at other times of the year. And in cities where winter means lots of snow and ice, the decrease is even more dramatic. In Denver, for instance, there are only about one-third as many homes for sale in winter as in spring or summer, says Denver real estate agent Jani Bielenberg of Bielenberg & Associates.
And this year, the inventory crunch is even worse. Home inventory is now at a post-recession low, down 9.1 percent nationally in the third quarter compared to a year ago, according to Trulia’s research. And this winter isn’t shaping up to break the trend, so buyers in many markets should be prepared for slimmer pickings. If you’re committed to buying this winter, it may be time to widen your idea of what your dream home looks like or which block it’s on.
2. But starter home buyers have a bit more to choose from.
For first-time buyers, though, the outlook in winter is sunnier. The inventory of less-expensive starter homes actually increases by about 7 percent in the last three months of the year compared to the spring, Trulia research shows. And the bump is widespread: 70 of the largest 100 metros see peak annual starter home inventory in the fourth quarter. That influx of homes for sale leads to listing prices that are about 4.8 percent lower in the first quarter of the year than in summer.
All of this can make winter a great time to shop for a starter home. But even with the seasonal bump, choices will be limited this year, when inventories are unusually low across all home types and the number of starter homes for sale is about 20 percent lower than at the same time last year.
“The takeaway here,” explains Ralph McLaughlin, Trulia’s head economist, “is that even though starter home inventory is now at the lowest count since we first started keeping track in 2012, starter home buyers should be able to find consolation at the end of the year.”
3. Open houses and bidding wars chill out for the season.
The upside of shopping in winter is that many would-be buyers call it quits till spring. That means less competition, a welcome reprieve for those disheartened by packed open houses and seemingly unwinnable bidding wars.
In Sacramento, for example, open houses this summer attracted 50 to 100 shoppers, and solid listings often received up to 10 offers, says agent Elizabeth Weintraub with Lyon Real Estate in Sacramento. In winter, that’ll drop to more like a dozen open-house shoppers and maybe two or three offers, maybe just one. There may even be time to visit a house more than once before making an offer, she says, which definitely wasn’t often the case this past summer.
To hit the market at its absolute slowest, aim for the weeks right around Christmas, when buyers more or less evaporate.
4. Sellers are ready to make a deal.
Many realtors advise their clients to wait until the spring and summer rush to sell. So homes that are on the market in winter often have motivated owners who cannot wait that long. These homes, especially those that failed to sell in the fall and are still on the market, may be ripe for a lowball offer.
“There is opportunity,” says Denver agent Bielenberg. Especially if you’re up for some renovation. Realtors sometimes encourage homeowners who haven’t updated homes in a while to put them on the market in winter, when they face less competition from snazzier homes. So, if you can look past oak cabinets, white tile counters, and worn carpets, you may find a home with good bones, fewer bidders, and a tempting price.
5. FHA buyers have a better shot at a winning bid.
With fewer shoppers in the market, prospects brighten for buyers with an FHA loan. These loans, backed by the Federal Housing Authority, have looser requirements than conventional loans, making them less appealing to home sellers who are getting all-cash offers or conventional loan buyers with big down payments. But with fewer winter bidders, home sellers often become more amenable to FHA buyers.
6. Home inspections may not tick every box.
In winter, home inspections may be more notable for what they don’t include than what they do. The air conditioning cannot be tested in cold weather, and snow may cover the roof. Also, are those trees just dormant or are they actually dead? Be aware of the gaps in the inspection and pay close attention to the age and type of the roof and air conditioner. If you’re concerned about the trees, an arborist can assess their health in any season of the year.
7. Interest rates are still stable, but some predict they’ll rise.
Interest rates shift more with economic conditions and policy decisions than with the seasons. And rates have been so stable, hovering around 4 percent all year, that “hardly anybody ever mentions them anymore,” says Lori Hicks, an agent with Hicks Elite Realty Professionals in Columbus, Ohio.
But don’t get too complacent. The Federal Reserve recently hinted at future increases, and the Mortgage Bankers Association has predicted that the Fed will raise rates in December and three times in 2018, though they also predict that 30-year-mortgage rates will remain below 5 percent throughout the year. It’s wise to watch this closely. If rates rise while you’re house-hunting, it can make a real difference in what you can afford.