If you are deciding whether or not to purchase a home in 2018, it’s good to have a current assessment of the market in which you’ll be shopping. Market variables such as mortgage rates, the new tax law and inventory levels all could impact home prices which is a variable many buyers consider when deciding whether or not to move forward


Mortgage rates may not necessarily be the final deciding factor in the home buying process, but they are important as they impact a borrower’s monthly payment, which affects how much they can afford to pay for a new home. Since the 2007-2009 Great Recession, interest rates have been historically low, enticing more potential homeowners to purchase. With the economy recovering and on the upswing, rates have been rising and experts predict that trend will continue. The good news is that rates are not expected to increase drastically and forecasters anticipate that rates will end the year around 4.25-4.75%. Although higher than the recent past, these rates are still historically low and very attractive to a majority of home purchasers.

The New Tax Law

The newly passed Tax Cuts and Jobs Act has been a hot topic of conversation over the past few months. How this legislation will affect the mortgage market is yet to be determined as the IRS is in the midst of updating the tax code in response to its passing. We do know that the cap for new mortgage interest deductions will be lowered to $750,000 from $1,000,000. Central median home price is lower than the national average. Because of this, the changes should have a minimal impact in our market, as most homebuyers will still be eligible for this deduction. The lowered cap may encourage affluent buyers to purchase less expensive homes as they seek additional tax breaks.

Inventory Levels

Low inventory levels may be the largest driving factor in the mortgage market for 2018. According to Redfin, a national real estate brokerage, little more than 650,000 homes nationally were available for sale in November of 2017; this is a drastic difference from 2010 when more than 960,000 homes were on the market. In addition to any impacts the tax law could have on inventory, builders are gravitating toward constructing apartments, condos and larger expensive homes in lieu of smaller, first-time homebuyer priced homes because of the larger profit margins. As a result, purchases of moderately prices homes could see prices increasing as inventory levels are not sufficient to meet demand.

If you are looking to buy a house in 2018, you should consult an ENB Mortgage Expert at (877) 773-6605) to determine if these trends will have an impact on your buying decision. You can also visit our mortgage resource center at ENBsmilemore.com for other mortgage information.