Lack of supply and an increase in demand over the last few years has made the housing market ideal for selling. Prices have been kept relatively high by this lack of inventory and a flood of first-time buyers, and 2018 looks like it will bring more of the same.
Millennials are now leading the home-buying charge, as they control more than thirty-five percent of the market (a number that continues to rise). According to the National Association of Realtors, millennials are trending more traditional in their home purchases as the years go on—buying homes in the suburbs because of the quality of schools and housing options.
That’s right, millennials are not sticking to the cities as much as years past. In fact, the number of millennials who purchased homes in urban areas decreased from twenty-one percent to just fifteen percent over a two-year period, according to a generational survey conducted by NAR.
Though more young people are taking the leap of home ownership, the rate at which homes are being built is still decreasing. For more than half a century, new homes were constructed at a rate of over 1.5 million per year, but after the housing market crash in 2008, that number decreased significantly enough to push the market to an all-time low.
The shortage is expected to subside slightly in 2018, which will be good news for buyers in the long run. However, as more millennials flood the market, the rate of new inventory will need to steadily increase in order to make a substantial impact for buyers looking to get a good deal.
Higher mortgage rates might also come into play this year, as current homeowners feel stuck or unable to move—especially with a lack of houses on the market to choose from. Though, homes that have gone on the market over the past year have sold extremely fast—record fast. According to statistics from NAR, homes in low inventory cities, like Denver, have been commonly selling in a week, or sometimes less.
Overall, sellers will maintain their upper hand in most markets this year, as inventory increases too slowly to meet the influx of demand, thanks to maturing millennial buyers. Competition will remain high among buyers, who will likely have to bid against multiple offers. This is not to say that the market is bleak for buyers—the prospect of home ownership is much brighter than it was just a few years ago. However, buyers will need to be open to moving quickly again this year, and be prepared to put up a fight.