It looks like most of the easy money in real estate IRAs has been made. The National Association of Realtors is looking for slower rates of home appreciation in 2018, as the supply of homes for sale finally catches up with demand later in the year.
Inventory will remain tight, however, at least through the first quarter, but aggressive construction will make itself felt in the marketplace in the fall.
There are still pockets of intense demand and shortage, and price trends are very positive for certain markets experiencing high job growth. The NAR expects a lot of new supply to come up for sale in the fall of 2018, so we may see some price weakness as we head into the 4th quarter of the year, says NAR chief economist Danielle Hall.
Sell to Millennials.
Millennials – those born between about 1980 and 1998, are now major players in the real estate market. Obviously, lots of these younger Americans will be renting. But they’re already major players in the homebuying market as well. More of them are qualifying for mortgages that are beginning to place them well beyond the “starter home” category.
Two-thirds of starter home buyers are Millennials. Though many of these young Americans currently rent, a substantial percentage are becoming major players in the homebuying market as well. Real estate IRA investors looking to gain the attention of Millennials and the younger family demographic should structure their investments accordingly.
Mortgage Rates Will Increase
Real estate IRA investors should lock in their rates early – and encourage anyone they are selling to to do the same. A combination of strong economic growth and tighter monetary policy and fear of inflation will create upward pressure on mortgage rates. Conventional 30-year rates could tick up to 5 percent by the end of 2018, projects the NAR.
Southern Markets Will Lead
We are happy to report potential real estate IRA prospects are strongest here in the South. The National Association of Realtors projects that southern markets will experience 6 percent growth, on average, compared to just 2.5 percent for the overall U.S. market. The South continues to generate substantial economic growth as employers flock to our warmer, milder climate. Both job growth and household growth are combining to make the southern and southeastern United States particularly attractive for real estate IRA investors.