2018 housing marketIt’s reached the point on the calendar where real estate pundits start rolling out their predictions for the new year. The team over at Realtor.com recently got in on the action, and their forecasts of the 2018 housing market contain both good and bad for California residents.

First, the good: Realtor.com predicts that in 2018, finally, housing supply will start to catch up for demand. The persistent lack of inventory since the fallout of the last housing crash has caused home prices to skyrocket. But by the second half of next year, the realtor.com economic team sees new construction helping to balance the market.

“The majority of the year should be challenging for most buyers, but we do expect growth in inventory starting in the fall,” said Danielle Hale, chief economist of realtor.com.

Given the expected growth in inventory, realtor.com is projecting home prices to rise by 3.2 percent in 2018.

So that’s a positive for those considering buying a home next year.

Realtor.com’s second prediction isn’t as positive. Although it does come with an asterisk.* It’s the proposed changes to the tax system currently underway in Congress. Realtor.com proclaimed, “The Republican Party’s proposed changes to the tax system could change everything.” Emphasis theirs.

It’s pointed out because of its sky-high home prices, Californians would be particularly hard hit if tax reform is passed.

“If a version of tax reform does pass with the current provisions affecting real estate, Hale says she would expect to see fewer home sales and declining home prices.

“However, it would be the upper price tiers that would likely be affected the most, in areas with expensive homes and high taxes, such as coastal cities, especially in California.”

You can find a Realtor.com breakdown of the tax plan’s effect on real estate here.

Realtor.com’s other predictions for 2018 housing market include the emergence of Millennialls in the market; and homes in the South will be “selling like crazy.” Sales are projected to grow by 6.0% in the South as compared to 2.5% nationally.