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The 2018 Outlook for Real Estate and Mortgage

What will the new year bring us in terms of real estate and mortgage? On a national level, we should see the same trends from the last half on 2017 continue into 2018, although there’s always a few wildcards.

Let’s take a look at some of the things that are going to be important in 2018:

The stability of interest rates. Although the interest rates were stable in 2017, that may not be the case in 2018. Freddie Mac is predicting a small bump in rates in 2018—up to 4.4 percent for a 30-year fixed-rate mortgage. The Federal Reserve is forecasting at least three rate increases to its key interest rate in 2018 and 2019, which may place upward pressure on mortgage interest rates in the coming year.

The continued rise of home price and values. The year-over-year numbers for prices and values have been increasing for some time and many experts are predicting a continuation of this trend, albeit at a lower rate of increase. Zillow expects prices to climb 4.1 percent in 2018 while the National Association of Realtors predicts a 5.5 percent rise in the national median existing-home price.

Improvement in home sales vs. low inventory. The National Association of Realtors predicts a modest increase in existing-home sales in 2018 as compared to 2017—5.67 million vs. 5.47 million, respectively—but such an increase will depend upon whether or not there will be an increase in total housing inventory or at least a slow-down of the decrease that we’ve been seeing since 2015.

The health of the U.S. economy. Many experts are predicting that the economy will continue its moderate growth in 2018. If the stock market keeps breaking records and new jobs continued to be created—along with improvement in unemployment, consumer confidence and retail sales—we should see similar improvement in housing and mortgage.

The effect of the new tax changes. Two of the big changes to the tax laws that will affect homeowners include a $10,000 deduction limit on a combination of state and local property, income and sales taxes and a reduction of the mortgage interest tax deduction to $750,000 on primary residences. The impact of the tax changes on housing and mortgage could be quite dramatic and will be closely watched in 2018.

Other new laws and policies. Besides tax reform, other laws and policies may affect housing and mortgage in the new year as well. One of these changes is the increase in standard loan limits to $453,100 (and $679,650 for high-cost areas), which will certainly help many borrowers in 2018 and beyond.

As always, keep in mind that market and economic conditions in your area may not necessarily reflect national trends. Also, for any financial or tax advice, make sure to consult with a financial advisor.

For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

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