Top Real Estate Trends to Watch in 2018

2018 carries with it some ominous trends that have some pessimistic real estate agents feeling suspicious about the market. There is a housing “shortage” which is a buzzword that sends shivers down the spine of anyone who makes a living putting new homeowners into houses. But there are some encouraging signs of life as well, and it’s not all doom and gloom! Here’s a look at some trends that are going to drive the market in 2018.


Trend Number One: Boomerang Buyers

Boomerang buyers are… back? Okay, bad pun, but this segment of buyers makes up a huge portion of the market for prospective home buyers in 2018. So what is a boomerang buyer, and if you are one of them, is there anything to keep in mind as you attempt to secure a home in the new year?

What is a “boomerang buyer”?
They aren’t from Australia, so let’s clear that up immediately. But they were “down under.” A boomerang buyer is a person who “went under” during our most recent recession and housing crisis and foreclosed on their home. Enough time has passed for them to have beefed up their credit scores and saved up some money and they are ready to get back into the housing market.

If you are a “boomeranger” there are some things you need to keep in mind as you dip your toes back into the housing pool:

If you didn’t have a down payment last time, plan on having one this time around.
80/20 loans were popular to supplant the need for a down payment pre-housing crisis. Times have changed, and in most instances, you’ll need a down payment to enter the arena of purchasing a home.

Get a pre-approval to make the process easier.
Your agent is going to want to know that you’ve got a realistic shot at getting approved. Getting the pre-approval will also let you get a basic idea of what you might qualify for as well, and they are a good idea in general for anyone looking to purchase a home.

Get your credit in order.
The foreclosure itself isn’t the end of the world. They do stay on your credit report for an average of 7 years, but if you have a low debt to income ratio and you keep all your bills up to date, you should have a good chance at getting approved for a loan if you’ve waited a while to re-enter the market.


Trend Number Two: Home Automation Becomes Prominent

It wasn’t that long ago that our culture was infatuated with a little product called “The Clapper.” The idea of being able to turn off appliances with a simple clap of the hand was mind-blowing. Now here we are, heading into 2018 with homes that are becoming increasingly self-sufficient. So what does it have to do with the real estate market?

Millennials and Generation Z buyers are here and making their presence felt. There was a time when having indoor plumbing meant that you were state of the art and there were probably people who balked at the significance and impact that development might have on real estate sales. But just as that technology made a difference in home buying, the market will be impacted by home automation in 2018.

It’s not just about being “cool” or trendy. 90% of those polled in a recent survey indicated that security was the number one reason they valued home automation. It’s more than just having Alexa play your favorite playlist as you cook dinner. Automation is turning lights on when you are away to give the appearance that someone is home, or turning off the oven when you get to the beach for vacation and realize you failed to take care of it before you left. Home automation makes life simpler, but also makes life more secure.

Smart HVAC systems, appliances, irrigation systems and building materials are being considered for sizeable insurance premium reductions, so there are even financial considerations for the implementation of home automation. These technologies have finally reached the point where they are affordable and accessible to the masses. 2018 is the year they go into effect in the world of real estate.


Trend Number Three: The inventory shortage will be felt in 2018.

Supply and demand remain the tried and true driver of the real estate market year in and year out. Available homes are down 12% versus this time last year, and over half of the homes that are available are in the top 1/3 of home values. In other words, if you are a first-time home buyer or you have a more limited budget, there just aren’t that many homes to pick from today. The market’s solution? Builders are going to focus on lower value, more affordable homes in 2018.

New construction will largely center around homes that are more affordable for the first-time buyer or the more budget-savvy consumer. The lack of new homes being built drove the price up and made buying a new construction home even less attractive as an option. To correct for that shift, the contracting market shifted to building smaller, more affordable homes to keep workers on sites and avoid layoffs and drops.

As a result of this shortage, you can expect home prices to continue to trend upwards. Home prices are expected to increase by an average of just under 5% in 2018, meaning that the market for the home purchaser is going to remain difficult throughout the year.

The pressures of buying a home that is overpriced are real. As Dave Tina of the Greater Las Vegas Association of Realtors (GLVAR) puts it- “You’ve got to put a ring on it.” If you wait too long to make a decision because of the price, someone else might come along and snatch it up before you can make up your mind. There aren’t a lot of options out there, so that home that was a “5” two years ago, might be a perfect “10” today.


Trend Number Four: Cleveland continues to look good.

Visit just about any industry group that centers on real estate and Cleveland is one of the cities they are talking about. Among the positives that industry pundits are lauding for Cleveland are:

• Strong Appreciation
• Low Vacancies and more supply than some other cities
• Low Property Taxes
• Low Income Taxes
• Healthy Local Economy
• Landlord Friendly Laws

Ryan Evans, an investor from Tacoma, Washington, had this to say about his Cleveland investments:

“My vote goes to Cleveland. I’ve got two duplexes there. The city has plenty of real estate potential and big economic drivers that are slowly turning it around. The number two medical facility in the world and a couple of the best sports teams in the nation, for example.”

So despite all the doom and gloom of the housing shortage and its impact on the market, Cleveland and surrounding areas continue to be a great place to buy and sell homes. In fact, Ohio home sales were up over 7% in October of 2017 vs. 2016. The Cleveland market continues to flourish.

Some might say it’s the sports, the casino, the hospitals—any number of reasons. We like to think the market benefits from some of the best real estate professionals in the country. The O’Reilly Team continues to lead the real estate market in Northeast Ohio in 2017, and whether you are a first-time buyer or looking to sell your home and downsize for retirement, we are here every step of the way to make sure that all your real estate goals are met. Contact the O’Reilly Team today, and head into 2018 confident that you’ve chosen the right team for your real estate needs.