Redfin, a national brokerage and real estate research company, this week issued its predictions for residential market trends and strategies in 2018. Attributed to Redfin's chief economist Nela Richardson, the predictions in general suggest it will be another year in which sellers have more control than buyers in much of the country. A big variable is the impact of the tax legislation now winding through Congress.
Here are the predictions and some excerpts from Redfin's statement about them:
1. Home buyers will leave high-tax states if state and local tax deductions are eliminated in the tax overhaul.
"In a survey of 900 home buyers, one-third of respondents said they would consider moving to another state if they could no longer deduct state and local income and property taxes. The housing markets affected by potential tax changes account for one in four of the homes sold this year in the metros Redfin tracks."
2. Fewer homeowners will sell due to new residency requirements in tax bills.
"Under current law, single homeowners can exclude $250,000 of sale proceeds from capital gains taxes as long as they have lived in the home for two out of the previous five years. Couples can exclude up to $500,000. However, the new proposal increases the number of years to five of the previous eight years, in order to deduct gains. This change will incentivize some homeowners to stay in their homes longer."
3. Wealthier millennials will popularize "urban suburbs."
"Certain high-income millennials are driving the formation of a new kind of neighborhood — the urban suburb. These home buyers want an urban lifestyle, including walkability and amenities, and also they want highly rated schools. ... Builders are responding by building homes with two or three bedrooms near public transit, restaurants and retail."
