Death, Taxes, & the Expectations for the Sacramento Real Estate Market in 2018
Certain Expectations for an uncertain world
If anything in life is certain, its death and taxes. But what would these even have to do with the real estate market in Sacramento in 2018? Unless you’ve been hiding under a rock, the new tax plan creates lots of new loop holes and even more expectations. As Realtors, we are always bullish on the local market. I personally try to find the silver lining as a matter of principle. While this past year has provided much to the doom and gloom set to finally be happy about. At least 2018 may have something for all of us. Every once in a while we get shown the light in the strangest places if we just look at it right.
What certainties lie ahead for this year? We can expect the inventories to remain low. As the home builders continue to struggle with workforce in the current low unemployment market with no end in sight. Given the tight markets and building costs at a high, new home pricing will continue to rise and with continued low resale inventory in Sacramento. Prices should remain stable as well depending on demand.
There are always factors that lurk in the shadows to be wary. In the coming year, it is expected that we will see interest rates climb as we have reached near zero unemployment and inflation becomes a concern. Many Realtors take pause when they hear about the hike in rates. This is not without basis in fact, however, I disagree with those who believe that the markets will suffer at higher interest rates.
Almost an entire generation of home buyers have not seen rates above 7%. With rates starting to climb, it is possible that it can trigger a spike in home buying to lock in sub 5% rates. The “boomerangs” haven’t all come back to market. The millennials are starting to behave like every generation before them as they climb out of student loan debt, have children, and start to settle down. The Baby Boomers are retiring at a rate of about 10,000 per day and the gen X’ers are following along. Are we on track for a big year? If there were some other factors that could come into play in 2018. Like a Tax overhaul?
Death and Taxes and ….
Its too early to tell what the change to the tax code will do to real estate this year. It may not have a real effect until 2019 when we all file under the new rules. Many have rushed out to pay their property taxes early, myself included (I had a supplemental from a pool addition). The concern over the SALT limitations has made many Realtors concerned. This too will scare people into thinking home ownership is not worth it.
Here is a sobering reminder, it really doesn’t matter to a majority of Americans how this plan is going to effect you. It is likely to be a net neutral over time with the benefits and the detraction washing out equally. It wasn’t done for us, it was done for the donor class. We might just see a really hot economy as a result. We may see a deep recession as well. Housing plays a different role here. Equity gain or loss versus having a home. The place we spend our lives versus the amount of interest we can deduct.
Home buying is one thing for all of us. Whether the market is good or bad. Whether the tax code is favorable or not. We are all doing as others have done before us when it comes to home buying. It is the events in our lives that really drive their buying cycles. First home, new marriage/domestic partnership, big promotion, relocation, empty nesting, vacation spot at the lake or the beach. There are moments in all of our lives, milestones in the passage of our lives that drive us to need a place to be. Regardless of our personal tastes or gender or identity, we all need to have a place to “you do you.”
2018 promises one thing, it will have 365 days. If you seek the silver lining, your more than likely to find it. The same goes for the dark clouds too. Regardless of your politics, the opportunity to succeed is there for you once you have decide what success means to you.
Have a safe and happy 2018. If I was right, and I suspect I will be, 2019 will follow…
Expectations, Expectations, Expectations, Expectations,
About Mike Kooken
Long time SOB (Son of a Broker). I have been selling and leading Realtors in the Sacramento Region for nearly 2 decades. I have defined my purpose as being a great father. A loving husband. A den leader for a local cub scout pack. A leader to those who need it and defender to those who need it more and a provider of knowledge to those who seek it. As I have helped agents sell billions of dollars of real estate and serve thousands of clients, it has become clear, we are all in this together and the more we can help each other, the better we all become…