Homes in the suburbs may get hot again in 2018
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Zillow forecasts that new houses like this in Clinton, Md., may in 2018 draw more millennials who are priced out of expensive urban markets such as Washington. (Benjamin C. Tankersley for The Washington Post)
Low inventory and rising prices have plagued the housing market throughout 2017. Real estate listing site Zillow says those twin issues will drive national real estate in 2018, too.
Zillow’s six predictions for 2018 include:
- More development will occur in the suburbs: Millennials want to buy homes. And while they may prefer urban centers, Zillow predicts a surge to the suburbs, where they can find more affordable homes. The combination of high land and construction costs as well as zoning restrictions make building in urban core areas more costly, so Zillow expects builders to develop housing farther from city centers.
- More building of entry–level houses: Pent-up first-time buyer demand will lead more developers to design and build affordable starter homes, according to the researchers at Zillow.
- Lack of listings will still hurt the market: Inventory of homes for sale has been falling since 2011, according to Zillow, with 12 percent fewer listings now than at this time last year. This will continue in 2018, particularly in hot markets such as Seattle and San Jose.
- Remodeling more appealing than selling: The lack of inventory is one reason more homeowners are likely to remodel their homes rather than sell them, which becomes part of the cycle that keeps listings down.
- Prices up, but not by as much: The Zillow Home Price Expectations Survey, which asks more than 100 housing industry experts and economists about their predictions for the year, projects that home prices will rise 4.1 percent in 2018, compared with price increases of 6.9 percent in 2017.
- New home designs meant to attract millennials and baby boomers: The two largest generations of home buyers, millennials and baby boomers, are often looking for similar things, albeit for different reasons. For example, wider hallways work well for strollers and for walkers and wheelchairs. Expect to see more thought put into convenient and safe features in homes, such as deep kitchen drawers instead of cabinets, according to Zillow.
For the full report from Zillow, click here.