In the Pleasant Hill, Walnut Creek, and Martinez area, the real estate market has been doing very well over the past several years. How does 2018 look for the real estate market? Let’s look at the various factors that impact the Bay Area real estate market.
You couldn’t have asked for much better home loan rates over the past several years. We’ve been at historically low levels. Although the Federal Reserve rates and mortgages aren’t directly related, they sometimes do provide a hint of the future. Over the past year, the Federal Reserve rates have inched up slightly a few times including just the other day. With predictions of increased economic growth, the Fed is expected to continue raising rates in 2018. While mortgage rates are expected to go up ever so slightly, all indications are that this amount will be negligible. Most experts believe that we will still be close to historically low levels. Thus, the real estate market will still have rates as a key motivator to keep the growth going.
Unlike the Bay Area home loan interest rate market, the tax laws are unlikely to remain steady. We can expect dramatic changes to tax law. Our 2018 Real Estate Tax Changes article went over these modifications. As a quick summary, these changes will impact deductions for moving expenses, property taxes, and mortgage interest. In addition, the residency requirement is changing to get the exemption for gains from the sale of your principal residence. This is going up from 2 years to 5 years. The magnitude of these rule changes poses difficulties in knowing the full effect. Saying that, many experts are predicting that the short term impact shall be very slight but over the long haul, these will negatively effect the market. The year 2018 is a short term period so these changes will likely not have a dramatic impact yet.
The local job market is booming. Unemployment has remained tremendously low and people keep moving to the East Bay for the lower housing costs relative to the City and great neighborhoods. With predictions that the economy could grow even faster in 2018, there are no visible signs of things easing.
The home inventories in Pleasant Hill, Concord, Lafayette, Walnut Creek, or Danville have remained very low over the past couple years. This has resulted in multi-offer scenarios with little room for buyers to have any wiggle room. 2018 doesn’t seem to change this as interest rates remain low and the economic growth engine keeps going.
The Bay Area home market is going to remain extremely strong in 2018. We expect steady growth with only the possibility of a global event or a dramatic direction in the new tax laws posing a risk. If you have specific questions about your real estate questions, feel free to contact the Wucher Team to get them answered.
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