Zillow forecasts 2018 home values to increase in all major metros

by Francis Monfort13 Nov 2017

Every major US metro will see home values increase in 2018, making it more challenging for first-time home buyers to get into the market, according to Zillow's home value forecasts.

Zillow forecasts the US median home value at $208,975 by September 2018, compared to the current $202,700 median. The estimate represents a 3.1% or $6,275 increase in value. This translates to an increase in the 20% down payment from $40,540 this year to $41,795 in September 2018. As a result, the average US buyer will need to save an additional $105 a month, or a yearly total of $1,260, to account for the increase in down payment costs.

Although home values are expected to increase by only 3.4% in San Jose, Calif., this translates to an increase of $35,934, the highest increase in terms of dollar value among all cities covered. A home buyer will then need $7,188 more next year to pay for a 20% down payment on the median home. This translates to an additional $599 per month in savings for a future home purchase.

Other markets where home buyers can expect to spend more for a down payment include Seattle, San Diego, and Riverside, Calif.

"Sky-high rents and rising home prices are putting first-time buyers in a bit of a catch-22," Zillow Chief Economist Svenja Gudell said. "Buying now with a low down payment can be riskier, and the offer may not be considered as competitive by the seller. However, a renter who saves for another year to reach a larger down payment may find that the home they love today is outside their budget a year from now. For those considering buying in the next year, getting into the market today may make more financial sense than they think."

Related stories:
NAR forecasts existing-home sales growth in 2018
Purchase originations set for $1.2 trillion in 2018


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