In today’s episode of the Stephen Cooley Real Estate Show, Stephen and Chris Salerno talk about what the 2018 housing market has in store. At the moment we have more buyers than we have homes – is this trend going to continue in 2018?
From Chris’s research for 2018 interest rates are going to go up. In the first and second quarter we should see a little spike coming. Towards the end of 2018 we should see them around 5%.
For more useful information watch this video:
STEPHEN: Hello, I’m Stephen Cooley and welcome to the Stephen Cooley Real Estate Show. It’s an honour to have Chris Salerno back on the show. Chris is a real estate expert in our area. Welcome back on the show today Chris.
CHRIS: Thank you very much for having me.
STEPHEN: We are at the end of 2017 and 2017 has been riddled with a housing shortage, surging home prices has been a crazy political arena especially with a new tax code and all that’s happened in 2017 and we’re at the very beginning of 2018 and has Chris to do as a real estate expert is to dig deep on all the research that’s out there and there’s lots of it.
CHRIS: Tons of research.
STEPHEN: Tell us what the predictions are for analyzing that research for 2018 because the housing market has done this over my career and it will continue to do that and so people need to be on a cutting edge of what’s going on. 2016 did not match 2017 and 2017 will not match 2018. Let’s just hit it first with what are interest rates going to do which is the biggest determiner long term of what you’ve paid for a home. The interest rate you get on the mortgage so what are the predictions from your research on that.
CHRIS: From my research for 2018 interest rates are going to go up. In the first and second quarter we should see a little spike coming. Towards the end of 2018 about the same time in 2018 we should see them around 5%. This is going by a lot of economists out there that have studied the market and that’s what they feel that the interest rate will be going up around this time actually by 5%.
STEPHEN: It’s almost like we’ve had interest rates now below 4.4 so long that most people in the housing market don’t remember. My first home in 1988, the interest rates were 13% and the people who bought a couple of years before that they were 18% and 22% and so a lot of buyers’ parents remember paying those type of rates, so below 4 is just crazy rate anyway. But I agree with you, from everything that I’m seeing and with the new environment and everything going on and I’m trying to tackle some rising for inflation, I do believe it will go up but stay under the 5%.
CHRIS: Yes, definitely and buyers should not be scared at all because the rising, it’s rising because the economy is rising as well, everybody is having a job and everything like that. Household income is rising from the previous 3-4 years.
STEPHEN: Unemployment is at its lowest in 17 years, so people are employed, people are buying stuff and that causes interest rates. Let’s talk about the housing shortage because we never thought with saying this turn to crash but we have more buyers than we have homes and that creates a different kind of environment too. This past spring we saw many offers on the same property. And that’s created the housing shortage. Let’s talk about that.
CHRIS: Right now and coming into the first quarter of next year, right now inventory is extremely low, I mean there’s tons of buyers out there that want homes but there’s no homes out there. So it’s extremely low and hopefully when that summer time comes around more homes will get on the market and I think they will, but right now, I mean inventory is extremely low and there’s lots of buyers out there that want homes.
STEPHEN: Yeah, what’s caused that low interest rate are the low amount of homes on the market and the low interest rates but the low amount of homes on the market is that when buyers got back in to the market after the crash, new construction wasn’t affordable. So buyers had to buy existing homes and so that got all existing homes balled up in a way they could less afford them. New construction is design to fill in the gap from demand and supply, so new construction has really kicked in, you can run around your neighbourhood, the streets you live on, the city you live in and you see a new construction everywhere now and that will satisfy in 2018 a bigger portion of the people needing a home so you probably won’t see this spring we had 1 home with 18 offers this past March. You probably won’t see that this spring because a new construction has really kicked in, we’ve seen even somebody’s big name builders merge and they’ll come out even more strong and more powerful and again if you ride around you’ll see tons of new construction that you did not see 5 years ago.
CHRIS: I feel like they’ve just come up overnight very quick.
STEPHEN: When I got in to business it was by following what the baby boomers were doing because the baby boomers were the children of men and women coming back from the world war II and so that calls a lot of people to be born at a certain time frame and they watched those baby boomers on what they wanted. The baby boomers now are moving into their final house, retirement home, but the new group that everybody’s got their eyes on and within the next 2 years will be our #1 group buying homes up to 50% of homes will be sold to millennials. A millennial is someone from 22 up until about 34 years old. So their parents threw a laptop in their crib. They’re very technology driven, the technology has caused instant gratification to be a huge thing so that all goes into their house buying needs too.
CHRIS: It does. It definitely changed the real estate world because a lot of millennials are on social media, on the internet looking at real estate and what’s happening is that with millennials they want to be closer to the city or they want to be a little outside the city but make their own city, kind of like NoDa. NoDa in North Charlotte was nothing a couple of years ago, but now they have shops, and they have restaurants and everything like that. And now a light rail’s coming to them for the city of Charlotte. So that’s a big thing with millennials now as they want something very .. instant gratification so they want a townhouse or condo close to the city.
STEPHEN: You know, when I was buying a home, people would ask what kind of home you want and I wanted a home like my parents’. The #1 thing not on the millennial’s list is their parents’ house.
CHRIS: You’re right.
STEPHEN: The home that the parents grew up in, that town, that look, that outside the city, that the last thing millennials will be looking for is their parents’ house. So if you ride around these new neighbourhoods you’ll see a lot of condos, apartments, all that appeals to millennials. They’re renting for a longer period of time, they’re buying property with people that aren’t necessarily their spouse and that’s how it is in the housing market.
Great information, Chris, it’s always a pleasure to know where we’re headed because we’ve kind of known where we’ve been and I really appreciate you putting all the hours into the research to come up with this information about what 2018 will look like. Chris is one of our top agents here on the Stephen Cooley Real Estate Group. Chris, if people are looking to buy or sell real estate in North or South Carolina how will they reach you?
CHRIS: You can reach me at my office number at 803-396-8992 or at my email firstname.lastname@example.org or my website at salerno.stephencooley.com
STEPHEN: Chris thanks for that great information. We’ve got beautiful homes for sale in your area, please stay tuned, we’ll be right back.
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