What To Make Of Homebuyers In 2018


Homebuyers in 2018 are going to bear witness to a housing market the likes of which we haven’t seen in quite some time. Proposed tax bills, low inventory levels, competition and increasing prices could all play a role in drastically shaping the way homebuyers in 2018 view the real estate landscape. That said, those investors that can identify the trends most likely to happen may find themselves with a significant advantage. After all, who are the most successful investors if not for those that remain one step ahead of the competition?

As an investor, understanding how homebuyers in 2018 view the market could prove invaluable. And if that sounds like something you could get behind, feel free to take a look at what I believe to be some of the most likely scenarios to play out for homebuyers in the coming year.

What To Expect From Buyers In 2018

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1. Millennials Aren’t Alone

Those close to the real estate industry have anxiously awaited the arrival of “more” Millennials for years. If for nothing else, Millennials are said to be the final piece of the puzzle; the remaining factor needed to give the recovery the momentum we have been waiting for. You see, those born loosely between 1981 and 1997 (Millennials) are not only coming of age and settling into careers with better pay, but they are also at the age when many people actively join the housing market. It’s no wonder they are being heralded as the saviors of the real estate industry; their presence alone should improve the overall state of the housing market. It’s their involvement that should serve as the catalyst for a more prosperous industry. And spark improvements they did, to the tune of the largest buyer demographic in the country. For several years now, Millennials have made up the largest pool of buyers.

It’s worth noting, however, that Millennials are no longer expected to save the market on their own. In fact, the next generation of buyers is already waiting in the wings. Generation Z (also known as iGeneration, Post-Millennials, or Homeland Generation) appears primed and ready to dip their toe in the housing market waters — if not jump in completely. At the very least, those born between the mid-1990s and mid-2000s are hot on the heels of Millennials. Those born at the beginning of Generation Z could be as old as 24 or even 25. And while many of them may not be quite ready to buy their first home, there will be those ready to take the leap. At the very least, a lot of them will fuel the rental economy.

All things considered, homebuyers in 2018 won’t start and end with Millennials and Baby Boomers; Generation Z will join in on the action, so be prepared to adjust your strategy accordingly.

2. Buyers May Look To Other States

In the event state and local tax (SALT) deductions are eliminated, which the latest proposal is expected to do, residents of states that already have high taxes could find their living situations unsavory. California, New York, New Jersey, Maryland, Massachusetts and Illinois — for example — are already subjected to relatively high tax rates, and if deductions are no longer available to soften the blow, homeowners could find themselves moving. It stands to reason that people with the luxury of being able to move will do so, and to cities where they can get “more bang for their buck,” nonetheless. It is conceivable that those in California could move just a few hours away to Nevada and save thousands on taxes every year.

According to a survey conducted by Redfin, “a third of respondents said that they would consider moving to another state if they could no longer deduct state and local income and property taxes.” The survey went on to say that “the housing markets affected by potential tax changes account for one in four of the homes sold this year in the metros Redfin tracks.”

As a result, we can expect homebuyers in 2018 to flock to those states with fewer taxes, as to be able to buy more home for less money. Alaska, for example, has become synonymous with low income tax, property tax, and sales tax. If you are less inclined to move to Alaska, however, you may want to consider a city like Bend in Oregon or Houston, Texas. Both states have up-and-coming hosting sectors and don’t bog down residents with too many taxes.

Again, this is all speculative, as we don’t know if the bill will pass. But if it does, we can expect a great deal of homebuyers in 2018 to look in states that aren’t already drowning in taxes.

3. Homebuyers Will Move Faster

The housing market has made impressive strides in the recovery, but one thing (or two) has prevented the recovery from meeting its potential: supply and demand. There simply aren’t enough homes to keep up with today’s demand. As a result, competition and prices have shot up in the past year, and there’s nothing to suggest they won’t do the same in 2018.

In 2017, homebuyers needed to move fast to secure the deals they wanted, before someone else swooped in or prices rose. According to Redfin, “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.” There’s no doubt about it: the 2017 market was faster than many expected. That said, homebuyers in 2018 can expect things to speed up even more.

The experts at Redfin suggest 30 percent of homes could sell in as little as two weeks in 2018, as buyers will be more motivated than ever to act fast.

Gain Your Edge

As I already alluded to, those investors that can get inside the minds of homebuyers in 2018 will find themselves with an advantage over the competition. That said, understanding the scenarios I hit on above could put you in a position to succeed in the coming year.

Key Takeaways

  • Generation Z could play a large role in shaping the 2018 real estate market.
  • Proposed tax bills could alter the way people view living in some states.
  • The housing market could move at a historically fast pace in the coming year.