Dec 19 2017 30851 1

Dec 19 2017 30851 1

10 Housing Markets to Watch in the New Year

By Suzanne De Vita

Dwindling inventory, high demand and even higher prices. Will the housing market shift next year?

According to a 2018 Housing Forecast by Trulia, the answer is contingent on many wait-and-sees. Definitive, however, is at least one indicator: the homeownership rate. In a continuation of its movement this year, the homeownership rate is expected to gradually track upward in the new year.

“Homeownership will continue its comeback story in 2018, as Gen Xers who were hard hit during the Great Recession become homeowners again, and as more millennials buy homes for the first time,” says Ralph McLaughlin, chief economist who developed the forecast, at Trulia.

A caveat: Across the board, buyers will contend with high costs, limited options and too-low wages—and millennials even more so.

“Homebuyers won’t be without challenges, as they’ll still face low inventory, slow wage growth and expensive starter homes,” McLaughlin says. “For millennials, they have the added hurdle of saving enough money to make a down payment and make competitive offers amid rising home prices.”

Buyers could fare better in some markets than in others. Considering economic indicators like employment growth, as well as entry-level supply, Trulia searches and vacancy rate, the forecast’s 10 housing markets to watch in 2018 are:

  1. Grand Rapids, Mich.

  2. Nashville, Tenn.

  3. Raleigh, N.C.

  4. El Paso, Texas

  5. San Antonio, Texas

  6. Fort Worth, Texas

  7. Austin, Texas

  8. Columbus, Ohio

  9. Madison, Wis.

  10. Cincinnati, Ohio

The forecast’s No. 1, Grand Rapids, is 11th in employment, 16th for its vacancy rate (the proportion of for-rent or for-sale supply that is vacant), and 17th in share of under-35 households—an indicator of a growing home-buying population.

One major what-if? Tax reform. If the mortgage interest deduction (MID) is capped at $500,000 (as proposed by the House plan) and the property tax deduction capped at $10,000 (as proposed in both the House and Senate plans), the burden will be higher for homebuyers along the California coast and in the Northeast. A broader consequence could include an easing of existing-home sales, home prices and housing starts, the forecast predicts.


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Dated: December 19th 2017
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