Looking back on 2017, there was an ongoing shortage of homes. Inventory levels have been down in most markets for several years now and that trend is expected to persist in 2018. This lack of inventory has made it difficult for buyers to find move-in ready homes but when they do find one, they rapidly jump bidding over asking price to beat out the competition. If you're a buyer slow to make a move, you won't stand a chance. You have to be ready to pull the trigger to be part of the action. Amazingly, many buyers are not discouraged by this market and have the financial means to act aggressively, which is good news for sellers.
Home prices were up in 2017 with the median sales price increasing a little over 7% in southeastern Michigan. Homes that were in great condition sold quicker and for premium dollars. Those that were in sub-par condition sat longer on the market and selling for much less. This shows how important it still is is to make the proper repairs and preparations before listing your home on the market. Otherwise you won't realize the gains others are getting from this strong market. Buyers don't want to make repairs and are willing to pay a premium price for a home in tip-top shape.
What can we expect in 2018? Tax reform will have varying effects across the nation with higher priced markets feeling the change stronger than the middle market. Some buyers may also view homeownership less of an investment due to the elimination of some of the tax deductions.
Additionally, interest rates will continue to rise, which will affect buyers purchasing power by lower what they can afford and adding to their monthly payments. Inventory levels will continue to tighten and remain at lower levels keeping buyer demand strong. Home prices will continue to rise but at a lower rate due to the depletion of quality inventory and rising interest rates.
So, what does this mean if you’re a buyer? Get an early start! If you’re new to buying process there is a learning curve to get comfortable with the market and as the year progresses, interest rates are expected to rise. Getting a jump now could save you money if you wait down the road. If you’re a seller… an early start will expose you to the largest number of eager buyers and reduces the risk of listing in a slower market if interest rates do lessen buyer demand.
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