2018 Industry Trends

2018 has arrived and as we welcome a new year in the real estate industry, it's important to look ahead at what's to come.As the market evolves, agents must be aware of changes to best meet their clients needs.

There are no definitive answers to what we can expect from the housing market in 2018, but we've compiled some of the top predictions form market experts, and here's what they're forecasting for the new year:


Price Increases

Many experts agree that inventory is the biggest factor in the 2018 housing market, and prices are expected to increase as supply remains low going into the new year. As reported in the Washington Post, Nela Richardson, chief economist at Redfin, said "for the third year in a row, the nationwide inventory shortage is likely to continue to hinder sales, and increase prices."

Just how much prices are to increase is debatable, however.

The National Association of Realtors is predicting a 5.5 percent price increase, with Realtor.com predicting a more moderate increase of 3.2 percent. A survey of 100 economists and housing experts conducted by Zillow predicts an increase somewhere in the middle, at about 4.1 percent, according to the Washington Post.


Supply, Meet Demand (eventually) 

Despite the inventory crisis, some experts are hopeful that by the end of 2018, the market will start to see a turn.

Danielle Hale, chief economist for Realtor.com, anticipates a tough market for the beginning of 2018, but predicts inventory growth starting in the fall.  "We expect the relief to start in the upper tiers, and it will make its way down to the lower tiers," she said.

Initial inventory growth is expected in the $350,000 range and up, according to Realtor.com, but those looking for starter homes and affordable housing may have to wait a bit longer.

"It will get worse before it gets better for buyers of starter and mid-price homes," Hale said.

Generations - Millennials, Gen Z, and Baby Boomers 

The needs are also shifting in the new year for several generations.

Millennials are coming in to their own in their careers, according to realtor.com, and as they begin to reach their mid 20's and 30's they are looking to settle down and buy homes.

"This generation has many different options for home ownership, including tiny homes, investment homes and co-living situations with friends or family... we, as agents, need to become more proactive in the community to become that millennial choice," Kevin Taylor, with Sand to City Real Estate Team told Forbes. "It's going to be a huge learning curve and a fun adventure all around."

Generation Z, those born from 1995 to 2001, are also starting to enter the market, according the Urban Land Institute, as reported by Curbed. They are expected to prefer urban living, much like millennials, and are entering the working world looking for "structure and stability," but are more competitive and easily distracted.

Curbed is also reporting the Baby Boomers will also be a factor in the 2018 market, as many are facing unexpected financial difficulties after the great recession. "While the high end of the market will seek out urban living, an active lifestyle, and luxury rentals, many others will scramble to locate affordable housing options fit for aging in place," they reported.


Small and Co-Living 

With millennials entering the market, smaller living is expected to rise in 2018, and over the next few years.

Nathaniel Kunes, with AppFolio Inc, told Forbes that tiny apartments and mobile living are solutions to large, overpopulated areas, and will become a norm in big cities.

Community spaces and co-living opportunities are also predicted to be popular in the new market in the multi-family sector, according to Benjamin Pleat with Doorbell Inc. "Just as amenities have defined the last decade of commercial real estate development, the need for unique experiences and services will heighten competition," he told Forbes.

The Washington Post stated that technology will also encourage co-living, with the number of households with roommates increasing in the past decade. Nesterly, an app pairing millennials with baby boomers, and CoBuy, which helps group home buying, are technologies to watch for this year.

Taxes 

As the Washington Post stated, the new tax bill passed after many experts gave their predictions for the market. "Some experts are anticipating prices won't rise nearly as fast because of the new law. Others say it will help first-time buyers enter the market," they reported.

Cindy Nasser, with PCVMurcor, told Forbes that the tax bill may increase the cost of doing business, which will "ultimately increase the cost to the consumer."

The tax bill took effect January 1 of this year, and will certainly play a factor in the market.

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