The El Segundo real estate market is still going to be heavily influenced by new government policies and a steady housing shortage. This will lead to fierce buyer competition in spite of higher interest rates. This means that for the rest of the year, it’s going to be more of a seller’s market.

If you want to buy or sell a home in El Segundo, you’ll need to know these 5 predictions about the 2018 housing market.

#1: Politics is Still King

Government policies are going to remain heavy influencers on the real estate market’s trajectory. Everything from new immigration laws to tax proposals has at least tangentially affected buyer and seller activity this year. There’s no reason to think that these policies won’t affect the rest of 2018. If you keep a close eye on what new guidelines and laws emerge from the federal government, you’ll definitely see ripple effects throughout the housing market.

#2: FHA Loan Limit Increases Will Continue to Aid First-Time Buyers

The FHA loan price caps for the high-end market and general market housing have increased. This means that the selection of homes has increased for first-time buyers in all housing markets. FHA loans make home ownership more affordable and attainable for people who otherwise could not afford the larger down payments of conventional loans.

#3: The Widespread Housing Shortage Will Persist

2018 will continue to be a fierce market for buyers. Competition for available housing will be steep as the national population grows while the availability of homes isn’t keeping up with the demand. Basically, new constructions aren’t staying neck to neck with the need. With nearly 25% of the construction force coming from foreign workers, strict immigration policies have decreased the availability of qualified laborers who build our homes. This means that the speed at which new constructions will be won’t be enough and keep the demand high.

Right now and in the near future, existing homes are going to be the main thing you see for sale. In addition, since there was already an existing housing shortage, the decline in new constructions will especially be felt this year. The key takeaway: If you see something you like, make an offer on it fast!

#4: Interest Rate Increases Will Keep Pressure on Buyers

At first blush, higher mortgage interest rates usually mean slower buyer activity. However, the current housing shortage and the fact that the rates are projected to go up, even more, means the momentum won’t stop. The only negative effect is that there will be fewer qualified buyers.

The average mortgage interest rate has gone from 3.5% to 4% already, but it can reach 4.5% by the end of the year for an FHA loan. Buyers will accept these rates because a fixed mortgage is still better than rent. Plus, if they wait to buy, they’ll have a higher interest rate in the future compared to buying a home now.

#5: Homes Will Continue to Sell Quickly

The interesting side-effect of fewer new constructions is that the competition is fierce for existing housing. In hot markets like major metropolitan areas with great jobs, houses can get under contract in less than a week. The urgency to do so is that home prices are also rising while interest rates are still lower than what they can be as the year progresses. The same trend is likely to be true for El Segundo homes, so if you’re ready to list or buy, now’s a great time.

Buy & Sell Homes in El Segundo

If you want to buy or sell a home, you’ll need to know all the facts to make the best deal. Use these 5 surprising predictions to your benefit as you prepare for your next real estate transaction.


John Skulick Realtor
Local Expert Tip provided by El Segundo Realtor John Skulick

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