January 4, 2018 | By RGR Marketing Blog

4 Predictions That Will Shape the Housing Market in 2018

Every end of year brings with it the hope that the next year will be better than the last. This extends from dieters looking to lose more weight in the new year to real estate professionals wishing for a more profitable and stable market in new year.

As a result, this is the time of year when real estate experts commonly make their predictions for what to expect from the housing market in the upcoming year. In 2018, the economy is expected to remain stable, with economic growth, job gains, and mortgage interest rates holding steady – so what can mortgage companies expect? Here are four predictions that just may shape the mortgage industry after the ball drops to usher in the New Year.

New Construction Mortgage Volumes Will Rise

In 2018, home prices and sales are expected to see some growth, which will result in higher loan origination volumes for mortgage companies, especially pertaining to new construction purchases. Existing home sales are anticipated to see little if any growth in 2018 due to limited inventory in this sector and the continued aging of the population, but new construction is surging.

In fact, according to Forbes, demand for new housing will be 1.183 million units in 2018. We’re currently on pace to 1.287 million single family houses, apartment and condo units, and manufactured homes, so we’re essentially building more than we need, and this could pose a different set of problems later.

Overall growth is expected to be about two percent, but that number could be slightly lower if existing home inventory tightens up.

Refinances Continue to Drop

According to Freddie Mac, refinances will only account for 25 percent of mortgage activity in 2018. Refinances have been steadily dropping in recent years, but 2018 is believed to bring them to their lowest numbers since 1990.

Big Mortgage Companies Will Get Bigger

According to National Mortgage News, the largest providers of residential mortgages will grow even larger in 2018 thanks to consolidation, in-market acquisitions, and the outsourcing of mortgage servicing rights to companies without their own platforms.

Home Equity Lines of Credit to Increase

With home values rising and mortgage refinances dropping, this sets the stage for homeowners with equity in their homes more likely to borrow home equity lines of credit to solve their costly financial burdens such as paying for home improvements, paying off student debt, or consolidating other debts.

Mortgage companies should understand that these predictions are based on national expectations. Depending on where you operate, they may or may not even apply to you. For more accurate expectations, you should always refer to your local community population data. Be sure to review the historic data on housing units permitted per 100 new residents. This will give you your best idea of what you can expect from your local mortgage industry in 2018.

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