While many of the topics in this space over the last 12 months have used past sales and statistics to provide insights and information, this week, I’m going to look into 2018 and share some of my personal predictions.
Home sales in the Greater Chattanooga region will continue along a positive path in 2018. The increase will be modest because of the tight supply of homes available for sale, but sales will continue at the record levels we’ve been experiencing in 2017. The overall economic outlook is positive, and unemployment remains low locally and nationally, so buyer confidence will continue into the new year.
Because of the continued positive sales trend and tight inventory levels, home prices will continue to move upward. While interest rates will slowly move into the mid-four percent range, these low rates will keep affordability in check and well below the pre-recession boom. National real estate experts tend to concur that buyers will stay in the market until rates reach the six percent range.
The inventory of available home choices will remain tight in 2018 for two reasons:
The number of new home starts, while increasing in 2017, will continue to fall well below demand.
There are simply not enough building lots and labor available to build homes to match the demand in our region or across the country.
Many homeowners who are candidates to upsize or downsize will stay in place, as they don’t see acceptable options for the next phase in their lives. With no compelling motivation, their homes will stay off the market and continue to reinforce the tight supply chain.
There are several factors that will affect the housing market, but the impact and timing will vary. The recently passed “Tax cut and jobs act” will eliminate the mortgage interest deduction for many local residents as they elect to take the enhanced standard deduction instead. This loss of value combined with the loss of property tax deductions will reduce the appeal of home ownership versus renting. The resulting negative impact on home values is yet to be seen.
A second looming change involves the long-discussed reform of Freddie Mac and Fannie Mae, the government-sponsored entities, which along with FHA are the primary source of lending for Americans across the country. Any significant impact on affordability will derail the positive predictions outlined earlier.
It’s been a pleasure sharing this space with you over the last 51 weeks. Once again, I encourage you to engage a professional member of the Greater Chattanooga Realtors as you approach any real estate decision.
The Greater Chattanooga Realtors are “The Voice of Real Estate in Greater Chattanooga.” This is a regional organization with more than 1,800 members and is one of more than 1,400 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors service Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. Visit www.GCAR.net for more information.