As the 10-year anniversary of the financial crash approaches, many real estate markets are still feeling the hangover from the biggest bubble burst in generations.
On the national level, the perspective is mixed but positive, and each market has its own story to tell. Experts say there’s little sign of an impending bubble or crash, but sharp headwinds still exist in many areas.
Here’s what you need to know.
Low Inventory Yields Tight Markets
The housing crunch continues to rage, even outside dense urban markets. Inventory shortages are widespread across the country, and single-home construction is still far behind luxury and multi-unit development.
While some analysts predict an easing pattern to develop by the end of 2018, it’s starting to seem possible that primary home buyers will get relief from declining boomer populations long before construction can fill the gap.
Patchwork Price Trends
Experts predict an overall 2-6 percent increase in prices nationally, down a bit from 6.8 percent in 2017. However, the picture is much more diverse on the market-to-market level.
Generally, popular urban markets are on fire, with cities like San Francisco, New York and Boston topping the price trend lists. Outside those cities, however, the outlook is very mixed. Las Vegas and other metros hit the hardest by housing bubble dynamics continue to struggle with inventory overloads and slack demand, while suburban and rural markets may go either way.
Market Segment Mismatch
The single biggest meta-factor nationally is the rise of millennial home buyers butting up against the historic longevity of baby boomer homeowners. With a huge amount of housing being held by retired owners and a construction sector focused on non-starter developments, the ranks of first-time buyers are skyrocketing without being matched by inventory levels.
This may be a troubling sign, as recession-scarred millennials have been skittish about buying real estate, and in the busiest markets, they’re often locked out of entry-level price tiers.
Real Estate Bubble Outlook
Experts are unanimous when it comes to the dreaded bubble: no way, at least for now.
The twin dynamics driving the bubble were skyrocketing prices across the country coupled with an unprecedented boom in sub-prime mortgages.
On both fronts, national markets are still much healthier than they were 15 years ago since pricing is widely varied and sub-prime mortgage levels are at historic lows.
The Final Verdict on the 2018 Real Estate Market
While the country’s housing stock still needs to match the demographic demands of buyers, bubble dynamics are completely absent. Buyers can expect most markets to remain active and tight, but outside popular cities, the prices should remain within the stratosphere.