Quarter One Review: Orange County Real Estate Market
How did we do so far in 2018?
At the end of last year, we made a few predictions on how the real estate market would act in 2018. One question has been answered: The year-end tax changes have had very little short term impact on the housing market.
With the first quarter behind us, let’s see how we have done so far.
Interest rates will go higher.
Prediction – expect Mortgage rates to end 2018 at 4.5% with rate hikes will come at a snail’s pace in 2018.
As anticipated, mortgage interest rates have risen, however at a quicker pace than expected as we are now fluctuating at 4.5% and up 5/8% since the first of the year.
Home prices will continue to rise.
Prediction – Home prices will gain 4.8%. Low inventory, steady demand and improved economic conditions will push home prices up in 2018.
As expected, the low inventory, especially in the lower price ranges have moved prices upward, less so in the luxury end of the range.
Home sales will increase.
Prediction - The number of existing home sales will remain at the same levels as 2017 as prices continue to rise and interest rates remain historically low.
Low inventory has slowed home purchases in the first quarter, though buyer activity is higher than last year.
Home affordability is declining.
Prediction – Wages have been increasing about 2.4% per year and I expect it to continue at about 2.3% for 2018. Inflation will be a minor factor for 2018.
Home affordability declined slightly in the first quarter as price increases have slowed.
With the exception of interest rates, it looks like 2018 is unfolding somewhat as expected and there does not appear to be significant change for the remainder of 2018.
We have some concerns:
- Interest Rates
- Tax Reform Plan
- World Economy
- “Washington D.C”