Fewer Homeowners Expected to Sell Due to
Longer Residency Requirements in Tax Reform Bills
High-income Millennials Will Popularize the
“Urban Suburb,” Suburban Neighborhoods with Public Transit,
Walkability and Amenities
(NASDAQ: RDFN)—The 2018 housing market is expected to be shaped
by continued demand for homeownership, tax reform’s effect on
affordability and low inventory. This is according to Redfin
(www.redfin.com), the next-generation real estate brokerage, in its
predictions for the 2018 housing market. Redfin chief economist,
Dr. Nela Richardson, expects the 2018 housing market to be the
fastest on record, with 30 percent of homes that sell next year
going under contract within two weeks, up from 25 percent in
2017.
Redfin’s Predictions for 2018:
Prediction #1: Homebuyers Will Leave High-Tax States
If state and local tax (SALT) deductions are eliminated in
high-tax states like California, New York, New Jersey, Maryland,
Massachusetts and Illinois, some people will leave these states for
places where they can get more home for less money. In a survey of
900 homebuyers, a third of respondents said that they would
consider moving to another state if they could no longer deduct
state and local taxes. Redfin migration data on its website users’
search activity reveals that people are looking to leave expensive
coastal cities for more affordable mid-tier cities like Sacramento,
Phoenix and Atlanta. The trend has already started, and tax reform,
if passed, will just intensify it.
Prediction #2: Fewer Homeowners Will Sell Due to New
Residency Requirements in Tax Reform Bills
Under current law, single homeowners can exclude $250,000 of
sale proceeds from capital gains taxes as long as they’ve lived in
the home for two out of the previous five years. Couples can
exclude up to $500,000. However, a new tax-reform proposal
increases the number of years to five of the previous eight years
in order to deduct gains. This change will incentivize some
homeowners to stay in their homes longer.
Prediction #3: Wealthier Millennials Will Popularize “Urban
Suburbs”
Certain high-income millennials are driving the formation of a
new kind of neighborhood—the urban suburb.
“We’re not talking about the Baby Boomer McMansions with huge
yards, where you have to drive a couple of miles for a cup of
coffee,” said Redfin Kansas City agent Wayne Gray. “We’re talking
about neighborhoods outside the city, but still relatively densely
populated, with walkable amenities and bikeable commutes.”
West Chester, Penn., Arlington, Mass. and East Meadow, NY top
Redfin’s list of urban suburbs expected to see an increase in
demand from millennials in 2018.
Prediction #4: Homes will Sell Faster than Ever, Up to 30%
Within Two Weeks
The 2017 housing market was fast, with 25 percent of homes
selling in two weeks or less during the peak of the buying season,
and nearly 1 in five homes (19%) off-market in less than a week. We
expect 2018 to be even faster.
Prediction #5: Mortgage Payments Will Increase at the Highest
Rate in a Decade
A combination of rising home prices and increasing interest
rates is likely to push monthly mortgage payments up even further
next year.
Prediction #6: No Price Bubbles--Even in the Hottest
Markets
Redfin analysts do not expect a bubble anywhere in 2018 for two
main reasons:
1. Buyers and sellers remain on the same page when it comes to
price, with a sale-to-list ratio at 100 percent or above in the
most expensive West Coast markets this year.
2. In West Coast metros where prices have now surpassed their
2006 peak, homebuyer debt has declined.
Prediction #7: The ‘Golden Girls’ and ‘Friends’
Return
Roommates accounted for or 6.6 percent of all households
(8,330,000 households total) in 2017, according to Census data.
Redfin analysts believe the trend of more people living with
roommates will accelerate in 2018 due to the lack of affordability
combined with new startups aimed at solving the problem.
“Inventory is expected to be the major factor shaping the 2018
housing market, but that’s nothing new,” said Dr. Richardson. “For
the third year in a row, the nationwide inventory shortage is
likely to continue to hinder sales and increase prices. We expect
small increases in inventory at the high-end of the market by
year-end. Starter-home inventory has not increased meaningfully
since 2011, and we don’t expect it to increase at all next year.
Exacerbating the problem is high rents and vacation home rental
platforms that make it both easy and lucrative to own more than one
home.”
To read the full report, complete with data and additional
insights, please visit:
https://www.redfin.com/blog/2017/12/redfins-2018-housing-market-predictions.html
About Redfin
Redfin (www.redfin.com) is the next-generation real estate
brokerage, combining its own full-service agents with modern
technology to redefine real estate in the consumer's favor. Founded
by software engineers, Redfin has the country's #1 brokerage
website and offers a host of online tools to consumers, including
the Redfin Estimate, the automated home-value estimate with the
industry's lowest published error rate for listed homes. Homebuyers
and sellers enjoy a full-service, technology-powered experience
from Redfin real estate agents, while saving thousands in
commissions. Redfin serves more than 80 major metro areas across
the U.S. The company has closed more than $50 billion in home
sales.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, subscribe here. To view
Redfin's press center, click here.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171211005203/en/
Redfin Journalist Services:Rachel Musiker,
206-588-6863press@redfin.com
Redfin (NASDAQ:RDFN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Redfin (NASDAQ:RDFN)
Historical Stock Chart
From Sep 2023 to Sep 2024