Year 2018 will bring surprising changes in the American economy and standard of living. To start off, Gennady Barsky, a real estate analyst, suggests that tax reforms will reduce the maximum amount of mortgage debt needed to get primary or secondary residence. One can claim itemized interest expense deductions from $1 million to $750,000. Moreover, the new law also bounds your state, property, and local income taxes to a total of $10,000.
“There are more real estate trends that will affect the circle of buyers and realty developers. Most of these are in the favor of real estate buyers,” says Gennady Barsky.
With the influx of new real estate projects, thanks to favorable market conditions and new developers on the scene, more residential and commercial properties will be available for purchase. Earlier, home buyers were applying great efforts to find the perfect property.
The main reason was that the population vis-à-vis homes available were far apart. Investors had bought a lot of homes after the housing bubble burst, following which they sold the houses at very high prices. As a result, not everyone could buy from them. Entry-level residential properties are not as profitable as luxury houses, which prompts builders to only develop luxurious accommodations.
This heralds good news for the first-time residential property buyers. The increase in home prices will remain stagnant or possibly decelerate this year. In 2016, home prices rose by 6.3%. This year, the realty inflation will reduce to 4.1% all across the US. It’s an outcome of single-family house construction rising in 2018.
This year will see a rise in the resale of homes. It has been estimated that the number of housing units on sale will rise by 2.5% to 5.6 million. Brand new homes on the other hand, will show a steady increase to 653,500 units by 7%.
The southern states will see most of the resale trends, especially Texas, Arkansas, and North Carolina. Loose regulations, stable local economy, and abundance of land are the main factors increasing real estate sales in these parts.
Mortgage rates will be the highest since 2011, according to CoreLogic, a data provider. They took the mean of six mortgage rate predictions, which gave them an average of 4.7%. Although it’s a small raise from 4.07%, the 0.63% increase can make a vast difference in the monthly installments.
Interest rates are infamous for their instability. When 2017 started, people expected the rates to rise steadily, which it did. But after March, the rate dipped below 4%, followed by a small peak.
As the mortgage rates rise, homeowners will get equity. More than 1 million real estate owners will get new home equity lines of credit, according to Gennady Barsky. The credit bureau foresees 67% of the homeowners having enough equity to get a Home Equity Line of Credit (HELOC).
More and more mortgage lenders are investing in software that automates the loan-application process. While some mortgage lenders use stock software, a lot of loaners like to order a customized application for their firm. Automation has sped up the loan process and the lenders can suggest better products based on the credit score of applicants through automation.
Gennady Barsky suggests that it’s the best time to sell your house as the interest rates are low. The forecasted increasing interest rates are a good sign for the appreciating economy, but it might create problems for those looking for new accommodations. For now, it’s better to wait and watch.