The Major Real Estate Trends Predicted for 2017
If you’re considering buying or selling a home this year, it's good to learn everything you can about the market trends in order to make the best decision. While predicting the real estate market behavior is problematic at best, this year is especially difficult to predict.
A major part of this is the uncertainty as to what President Trump will put in place with respect to housing policies. Apart from this, other market trends for the new year are relatively clear.
The Outlook for Housing
Growth in home values should see a slight drop from 2016, tempering the high home value appreciation rates in market recovery that followed the housing crisis. This year will be more in line with the historical appreciation rates.
Renting too is set to become more affordable this year as Incomes are growing faster than rentals for the first time in a long while. This is also in part to an increased supply of more multifamily rental units coming into the market, while many renters have teamed up with roommates.
One thing that’s likely to move up though is mortgage rates from the record lows for years. Rates are climbing now and are expected to keep doing so next year. This essentially makes it inevitable for buyers or sellers to act (transact) sooner rather than later this year.
Due to the same reason, new construction that always comes at a premium will be even higher in 2017. An existing labor shortage in the construction industry will be exacerbated due to tighter immigration measures.
Millennials to Lead the Way
One clear trend is that the oldest of the Millennial generation will get into their mid-30s and many will be entering into marriage, having children and most certainly buying houses to settle down. Several other factors also contribute to this broad trend, with more jobs being created for this segment (early thirties) than other age groups and rising wages.
While traditionally most young people headed for the coasts after college, an increasing number are now choosing to settle down and buy homes in the Midwest. These markets are often close to large universities, offer well-paying jobs and are relatively more affordable.
On the other hand, prices on the already-expensive West Coast continue to rise, where the most significant job growth has been since the recession. Population growth tends to follow jobs and due to the market's lack of inventory. As a result, everything will be priced higher.
Baby Boomers – Still swinging
On the other hand, the oldest of the Baby Boomers, who are entering their late 60s, are also looking to move as they approach retirement. This is in contrast to the last few years that have seen their participation in the housing market dwindling. Many already possessed homes and were reluctant to sell properties that have now recouped their value lost in the housing bust.
While this segment is mostly looking to downsize and control expenses, there are also those who plan to buy the biggest house just so that their children and grandchildren can come to visit. Many erstwhile boomers are opting to move closer to their families rather than traditional retirement hot spots like Florida or Arizona.