Top 5 Housing Predictions for 2018

As the first month of the new year closes, we are starting to see the 2018 market take shape, and getting a clear look back at the 2017 year. Last year was a strong one for sellers – interest rates remained low, but are now rising, and refinancing plummeted. So, what’s next for 2018?

Take a look at the summaries of Summit Funding’s Top 5 Housing Predictions for 2018, with commentary from yours truly:

  1. A rise in cash-out refinance

Low-interest rates have fueled buying, kept inventory low, and likely even helped speed up housing recovery in Miami and Houston after their 2017 hurricanes. Interest rates will continue to rise in 2018, but not high enough to deter interested homebuyers. We should, however, keep an eye on a potential rise in cash-out refinance, as Americans’ home equity wealth is at an all-time high. We are also seeing the rise of all-cash purchases, a high rate of home purchase co-borrowers, and increased buying assistance from family. As home prices become even higher — and overvalued, according to CoreLogic — expect to see more parents cash out their home equity to help their adult children begin building their own housing wealth.

  1. Return to services

With higher home prices come great risks and more compromises for homebuyers, who will become ever more reliant on experienced and informed housing professionals to make buying and mortgage decisions. Mortgage rates will continue to become a commodity; homebuyers have access to rates on their devices and know mortgage brokers are quoting from the same rate sheets. As homebuyers evaluate their partners, they should look for realtors and mortgage professionals who offer value that protects the clients’ bottom line. Housing professionals who deliver this will be the ones who can truly stand out and have longevity in this crowded market. A great lender and agent can make all the difference in the world. Be careful you are comparing apples to apples when getting rate quotes, as it can’t be locked in until you get an accepted offer so lenders can you give varying rates as they know they will be different the day you get an offer accepted.

  1. Advancement in housing Fintech

Expect technology to continue to make breakthroughs in housing. The proliferation of information has made everyday consumers more demanding of progress and fairness, which is a good thing. They demand more competition for their business and stronger customer empowerment. New housing financial technology will not just be about faster search results or more photos, it will be expected to serve up more home buyer protection. In 2018, homebuyers will increasingly question why they could sell a home at a loss when realtors still collect their brokerage fees. When they see a pre-closing statement listing fee paid to protect their lenders, they would demand to see the calculation of risks and returns designed to protect their purchase. Getting ahead of these questions and demands will become table stakes in the advancement of housing financial technology.  This may be a ways off.  There is a lot of buyer protection now as a result of the downturn.

  1. Millennials may continue to prolong homeownership

Americans — including millennials — want to own homes; we knew this already. However, millennials may want other things in life more than homeownership, or they don’t want to be “house poor.” Affordability is definitely the top barrier to home buying, no doubt. However, there are increasing indications that millennials are not pulling out all the stops to buy a home even if they could afford one. In ValueInsured’s latest Modern Homebuyer Survey, 36% of millennials who want to buy a home say they are delaying buying in order to keep their options open. Nearly half (47%) of millennials also say they worry their job future is uncertain and want to figure that out first. Instead of paying high home prices, millennials have proven unafraid to give up buying and go back to renting. A generation known for defying conventions and expectations may change the housing market forever in 2018 if they say “enough” to high home prices and decide to do their own thing.

  1. The next Seattle or San Jose

In the future, scorching-hot real estate markets will give rise to more calm and cool emerging markets. Places like Provo, UT, Athens, OH and Aberdeen, SD may be hot spots in 2018. More Americans will telecommute to their jobs or shop from their devices instead of at malls. This is simply a fact of life. So, as real estate prices and commercial rents increase, more Asian fusion restaurants, CrossFit studios and organic micro-breweries will open in previously ‘B’ or ‘C’ designated counties. Once upon a time, Portland, OR and Chattanooga, TN were seen as hidden real estate gems, and now they are cities millennials are leaving behind in search of more affordable homes. Millennials’ tendencies to be nomadic and to reject established institutions (or markets), and their sophistication in forming their own community, could prove to be very interesting in challenging traditional housing cycles and expectations.

Stay tuned for December to see if these things panned out or were just a pie in the sky.

New year, new kitchen?

Every year, just like in the fashion industry, there are new styles and trends to consider in real estate design. As told by foodandwine.com, there are going to be some flashy changes to kitchens in 2018. While I personally wouldn’t do some of these things to my kitchen, I can’t deny most look good! Check out a summary of their story below:

Trend #1: “Unicorn” colors

Apparently, white, glossy kitchen units were paired with gentle tones of pale pink and blue, with gold accents and a little glitter in late 2017. I don’t get this one, and not sure why it is popular!

Trend #2: Two-tone cabinets

This one I can get behind. While cabinetry is typically a light or dark shade, it seems more and more people are opting for colorful options in their kitchens. And doing two different, complementary tones is a style gaining in popularity. I  like the look of a dark blue against a light blue or a bright red against a standard neutral.

Trend #3: Morocco themes?

Consumers are playing with colorful, mosaic backsplashes, pendant lanterns, and other Moroccan-style decors to warm up their kitchens. I think if done properly and in moderation, this trend can look fantastic, but it might only be for people who really like that style.

Trend #4: Statement patterns

Some people are starting to add cabinetry, doors or islands with intricate designs and patterns on them. I don’t personally like the look – it feels like a stretch – but you may be seeing more of this in 2018.  For example, you may see zig-zagged cabinet doors or a herringbone pattern on the wall of islands.

Trend #5: Matching living room furniture

This trend is gaining momentum because having an open concept is now so popular. If you have a kitchen that opens up into a family room or dining room, you may see homeowners trying to mesh the two looks in the connected rooms. For example, a TV stand might have colors and patterns that match the kitchen, while also being a storage area for extra dishes.

Trend #6: Eco is in

More people are starting to consider environmentally-friendly options when creating their kitchens. More organic materials are being used, including plywood cabinetry, cork flooring, concrete tiles, walnut worktops and bamboo lighting.

Trend #7: Gold & copper

Even with all the eco-friendliness and experimentation, kitchens can still look glamorous. That may be the case, considering foodandwine.com expects there to be more shimmery metallics this year, especially with gold and copper. From handles to tiles to lighting to small appliances, expect more flash this year!

Trend #8: Water & wine

Hot water taps are quickly overtaking the use of kettles as they become more affordable and more practical to install. Similarly, wine coolers are cheaper and cheaper, as well as smaller, so finding a good, usable model is becoming easier. You’ll see more wine coolers in kitchens and fewer kettles in 2018.  (Side note: still love my hot pot!)

Fall Back: Daylight Savings Time!

This is an urgent reminder for those of you who have Sunday morning plans! Or even for those who are planning to roll out of bed a half hour before NFL games start and sit on the couch all day (nothing wrong with that!).

At 2:00 a.m. tonight, clocks will fall back an hour so your internal clock might wake you up a bit earlier. It’s worth that sacrifice of being tired earlier to get the extra hour of sunlight we’ve been so desperately missing. Just remember to reset your clocks tomorrow morning when you get up!

 

What the most recent rate hike means

How rate increases affect your payments

We’ve seen rates increase since Donald Trump won the election. Now, the Fed is saying they’ll do three rate hikes instead of the expected two in 2017. This caused rates to bump up about half a percent. What do interest rate increases mean in regards to a buyer’s payment and the overall market?

interest-rate-hike

According to The Wall Street Journal, if we adjust for inflation since 2006, housing prices are actually 16 percent below their 2006 peaks in most areas.  Many economists are saying the demand for housing remains as strong as ever and that recent rate increases will have a minimal effect.

However, people usually make home purchases based on payment. So as interest rates increase, somebody thinking of purchasing should know a 1/2 percent increase in rates for a $500,000 loan, increases the payment about $140-$150 (and even less after “tax benefits”).

bear-and-bull-market

Should buyers and borrowers wait to see if rates fall before moving forward with transactions? Jay Voorhees of JVM Lending says absolutely not. Borrowers can easily take advantage of no-cost refi’s if rates fall.

And, as Gary Shilling wrote in a Forbes column on Dec. 6, he thinks the markets massively overreacted to Trump’s election. He points out that the root causes of weak economic growth (that have kept rates low) will remain. He also says that Trump’s proposed tax cuts and stimulus programs will be watered down by Congress; the expectations of an economic boom are overblown.

What do you believe? Are you bullish or bearish? This election reinforced the notion that nobody has a crystal ball and sitting on the fence waiting for one outcome or another may be the worst thing you can do.

Pantone “Color of the Year”

Everything’s coming up Better Homes and Gardens right now. Even Pantone’s Color of the Year is “Greenery,” which is very similar to what we use here at BHG.

Lee_Eisemann Pantone Color of the Year 2017 GREENERY
Picture Credit: Pantone.com

Check out the story on the Color of the Year, which Pantone describes as “a fresh and zesty yellow-green shade that evokes the first days of spring when nature’s greens revive, restore and renew.” As an outdoor enthusiast and BHG realtor, I love this. But, I probably won’t be painting my walls this color – I think it makes a great accent color!

My favorite part of Pantone’s description, though, is this at the end: “A life-affirming shade, Greenery is also emblematic of the pursuit of personal passions and vitality.”

As we near the end of 2016 and move into 2017, it’s a good time to reflect and consider what we’ve accomplished and what there is to look forward to. I have a few resolutions: up by 6, work out Monday through Friday and in bed before 11 (no more falling asleep on the couch)! And of course, the time to lose some weight needs to become a reality versus just thinking about it. I am also going to start a remodel and add an in-law unit to my current house; I’m thinking about setting myself up for retirement. What is on your New Year’s resolution list?

East Bay New Year’s Eve events

This New Year’s Eve, there seems to be a ton of fun events at local establishments for you to ring in 2017 with.

nye-2017

For me, New Year’s is a time to reflect on the year that has just passed and to focus forward with new resolutions – what can be improved, how to get into shape and what can I do better. I tend to struggle with the idea that one has to have a special celebration for this event, as I always find the hype does not live up to the expectation, and I am left with disappointment.

My best New Year’s celebrations have always been the unexpected. My favorite was a last-minute ski trip to Sugar Bowl where we scored a small room due to a cancellation. Our kids had the run of the lodge because the only way in was by gondola, and we could walk out the door to the lift.  To our surprise, they had night skiing, champagne and sparkling cider at the hut atop the hill. Then, at 11:30, those who wanted to participate did the torch run, and when all were safely down, the fireworks exploded! So as the clock hits midnight, we all turn the page and start looking forward to new adventures in 2017.

If you feel that you have to do something and have made no plans, but don’t want to venture all the way to San Francisco, take a look at a couple of local events taking place on New Year’s Eve:

  1. The Groove Doctors at San Ramon Marriott (8:30 p.m. for $77/ticket)
  2. Phantom of the Opera Masquerade at Nica Lounge in Concord (8:30 p.m. for $15-50/ticket)
  3. New Year’s Eve at Jack’s in Pleasant Hill (9:00 p.m. for $40/ticket)

Of course, you could always do something unexpected and maybe have the best New Year’s ever! No matter what you choose, I wish you a delightful evening and a prosperous 2017!