Yes, it is the time of year where everyone is wondering what the real estate market will bring for 2018. We have a lot going on in this spring market. We have the new tax laws. We have the rising interest rates. We have the influence of the economic climate in Connecticut. So where does that put us.
I have been reading and listening to every economist that I can to try to get a handle on the market. Of course, before I go forward, I will tell you that my crystal ball broke in about 2000. Up until then I could tell clients that real estate prices NEVER go down. Oh well…
I recently also attended banking panel with top people from Flagstar Bank, Savings Bank of Danbury, Total Mortgage and Wells Fargo. They made some very good points.
ON THE TAX CHANGE
SALT- The limit of $10,000 deduction on State And Local Taxes
Yes it is bad for CT but it is even worse for our neighboring states of
NY and MA, so expect to see a wave of buyers coming over to CT where
the property tax are MUCH less.
Standard Deduction- Since this and also the child deduction are being raised it will
put more money in most peoples pockets.
Corporate Tax Changes- Since their tax bracket is lower they have more capital for
expansion, bonuses and will encourage some to bring jobs back to the US.
INTEREST RTATE CHANGES
Remembering that the interest rate was 18% when I moved to CT in 1981, these small,
incremental increases will do more to drive buyers into the market who might have
been on the fence. Rates are anticipated to reach 5% in 2018.
STATE OF THE CONNECTICUT ECONOMY
Yes, this is a problem and has been for decades. CT simply does not have the financial
reserves to entice companies into the state or to get them to stay. The long term solution is that we need more revenue so that we can give them the incentives they need to choose us. It sound like our legislature understands this and is looking at more revenue producing avenues…whether it be working with the unions or a toll system or other options.
My prediction is that home sales will stay robust and we will just begin to see our normal 3-5% annual appreciation. Don’t expect to see double digit raises until we can stabilize and grow the CT economy.
1- There are 7 Million more Millennials than Baby Boomers.
They are late to the market but the wave of buying is starting. Their buying trends are different. They are buying small, low maintenance, high energy efficient homes. They have seen the stress of their parents maintaining the huge homes built 1980-2015.
2- The mood of the country is positive.
There has been wage growth and low unemployment.
3- The inventory is EXTREMELY low.
This will begin to create some upward pressure on home prices, at least in the corridor touching NY State. Over the last 4 years the prices have been FLAT in our 11 town area but the volume of homes sold has been excellent.
I do my very best to keep up to date on these trend so that I can advise my clients to the very best of my abilty. Call me if you would like a more in depth evaluation for your own home. Some price points are already seeing appreciation, while other are still falling.