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MyFolsom’s Predictions for the 2018 Local Housing Market

Posted on: December 19, 2017

housing up and down

Well, it’s that time of year, when all of the experts, naysayers and blowhards come out with their predictions for the housing market.

I fall into one or more of those categories, so I thought I’d toss in my two-cents.

I take all of my experience,  my observations, market trends, news reports, rumors and scuttlebutt, throw them all in the hopper, and give it my best guess.

Here now, my predictions for the Sacramento area:

Housing prices will rise about 5%.  This can vary by community, and although the demand is still there, even increasing, affordability is becoming an issue for the entry-level buyer, and the down-sizer and rental property investors are wondering if it makes sense to pay 2005 prices. Public sentiment has as much to do with it as anything, and the public seems to be resisting the higher prices. One thing that could change that is the fact that the conforming loan limits have been raised, making it easier to get loans at higher prices, but that doesn’t mean buyers are willing to pay them.  Still if you combine drivers of housing demand with the shortage or rentals, which can cost as much as a mortgage, the demand will be there. I think buyers at the entry level are just going to be more cautious and selective, or choosing other communities.

Higher-end homes will start to move. Wait. Didn’t I just say that the public is resisting higher prices? Yes, in most markets, the high-end homes are slow to move. While the average home buyer may be facing affordability issues or just refusing to increase their spending, the high-end buyers are going to jump off the fence. With an improving economy and proposed tax cuts, there will be renewed confidence among those with deeper pockets. Look for them to go for their dream homes in parts of Folsom and El Dorado Hills.  A cap on mortgage interest deductions could affect that in the other direction, so there’s that.

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Filed under: Folsom, Real Estate