Back in 2008 and 2009, everyone thought the world was ending when it came to the housing market. The housing market crash meant a wave of foreclosures across the country and plunging real estate values that left many homeowners underwater. When home prices went down, they took with them billions of dollars in household wealth and home equity, and precipitated a crash in stocks, layoffs by the tens of thousands and the failures of many banks, mortgage lenders and investment banks. Many pundits and analysts predicted that the housing market could take a generation to recover.

Ten years later, nothing could be further from the truth. Boom markets have returned to many parts of the country, and many homeowners are sitting on fat piles of equity.

Granted, the election of 2016 made it hard to predict what happens next in many regards (let alone trying to make housing market predictions for the next 5 years). Still, we’ve been able to read the tea leaves and pull together some expert opinions on what’s next for mortgage interest rates trends and the housing market in general.

Inventory Will Stay Low 

In many parts of the country, housing inventories are pretty depleted and are expected to stay that way. Zillow has noted that housing inventories nationwide declined over 10 percent from November 2016 to November 2017, with less than a quarter million homes for sale across the country. That’s resulted in bidding wars for houses that do go on market, and zooming appreciation of home values in many areas.

For 2018, the consensus with analysts is that inventory will pick up a little bit as people realize that home prices can’t continue to outpace wage growth. In addition, life events (such as retirements of Baby Boomers) will force some sales and construction has started to move toward new single-family homes and fewer apartments. That expansion of single-family home construction is tempered, however, by the prices of materials and raw land, as well as labor costs for home builders.

Renting vs Owning 

Congress just passed a comprehensive tax reform bill that puts more take-home pay in most people’s pockets. The down side of that, however, is that it’s now more expensive to own a home (at tax time, anyway) in areas that are already expensive. As that scenario plays out, it’s likely that more people in expensive real estate markets may find renting to be a better option

Many have noted this phenomenon in regards to Bay Area housing predictions for 2018, as well as many other expensive markets. The tax bill has restricted mortgage deductions for state and local taxes, which are already very high in states like New York, California, Connecticut, Illinois and New Jersey. It’s a situation that can be especially difficult for young first-time home buyers who are saddled with student loans already and are finding it difficult to save up the money for a down payment. For them, renting makes more sense than the commitment of buying a home and keeping up on maintenance, taxes and other responsibilities that go with it.

Lending Rates Will Stay Low 

Granted, there’s a certain amount of conjecture and reading of tea leaves here, but it’s generally predicted that lending rates will stay around 4 percent. Back in December of 2017, the Federal Reserve raised short-term interest rates 25 basis points, to a range of 1.25% to 1.50%. It’s expected that this will correspond to a hike in mortgage rates, but three bumps in rates in 2017 and two the previous year barely moved the needle on lending rates.

The consensus is that the year will finish with rates that are hovering between 4% and 4.5%. That’s a slight hike from where they were for most of last year, but still remarkably low.

Millennials Continue Into the Housing Market 

Nationwide, home ownership rates have ticked up to nearly 65 percent, and it’s those who were born in the 80s that have been fueling that rise. That cohort of Americans has now reached an age where they’re well into their careers and are settling down, getting married and starting families, and are seeking the stability of home ownership. Interestingly, single Millennials are buying homes at rates that are greater than single Baby Boomers or Generation Xers did.

Of course, it’s wise to take any predictions like these with a grain of salt, since we live in volatile and unpredictable times. After all, we all saw the end result of the “irrational exuberance” in the late 90s and early 2000s housing market. The general mood in the housing market, however, is one of cautious optimism and a good outlook.