6 Real Estate Trends to Expect in 2017
Let’s face it: Consumers were spoiled in 2016. Mortgage rates fell below 4 percent at the beginning of the year and then spent the summer toying with record lows. While we won’t claim to know everything that 2017 has in store for real estate, 2016 did surprise us with helpful hints we can use to predict various trends for the new year.
Our housing forecast highlights the following 6 real estate trends that are likely to influence home buyers and sellers in the upcoming year:
1. Home values will gradually increase
As the market recovers from the housing bubble burst and crash of previous years, home values continue to appreciate at extremely high rates. In 2017, we predict that these high appreciation rates will level out to traditional figures.
According to Realtor.com, national home price growth will increase at a rate of 3.9%, which is a decrease from its 4.6% increase in 2016. This slowdown in appreciation is an inevitable effect of the market’s recovery, and it signals that the nation’s housing market is stabilizing.
2. Millennial and baby boomer buyers will be big time influencers in the market
These giant generations are facing changes that motivate a person to buy a home because we can all agree marriage and children do not always go well together living under mom and dad’s roof. Older generations are also looking to purchase new homes to fit their needs. One of these needs could be downsizing as they become empty nesters and even inch towards retirement.
As the oldest of the millennials push into their mid-30s, many will start to buy houses and settle down. More jobs are evolving for 25 to 35 year olds than any other age group and wages are rising. This wage increase, paired with the desire to accomplish the benchmark life event of buying a home, is filling the market with millennial buyers.
Baby boomers, the oldest of whom are entering their late 60s, are looking to move as they reach their retirement years or no longer have a house filled with children. In the last few years, baby boomers’ participation in the housing market has faded. Many already own homes and may have been reluctant to sell until their properties recovered the value they lost in the 2008 housing crash.
While a sizable number of baby boomers want to downsize to control their expenses, we’re seeing others that want to move to an even bigger home to accommodate their visiting children and grandchildren.
3. Fewer homes on the market and a faster-moving market overall
According to Redfin.com, there are 11% fewer homes for sale in the top 100 U.S. markets than last year and those homes are selling 11 days faster than the national average. In many places across the United States, it continues to be a seller’s market as more potential home-buyers sift through the lack of inventory.
This competitive market creates a spirit that requires buyers to be prepared and ready to act quickly when they find that dream home. Most importantly, make sure to have a great real estate team behind you and stay organized; this will be your key to house hunting success in a low inventory market.
4. Trends of moderately rising mortgage rates
Following the housing market crash, mortgage rates remained at record lows for years. However, these numbers are showing drastic changes as rates are climbing and are expected to keep trending up through 2017.
Homebuyers and refinancers had a lucky run in 2016: the average 30-year fixed-rate mortgage was under 3.75% all summer. This rate shot upward after the presidential election and forecasters believe that mortgage rates above 4% are here to stay. Historically speaking, these rates are still relatively low.
Whether you are a buyer or a seller, these rising rates should steer you to act sooner rather than later if you are in the real estate market this year. Rates are only expected to increase as we move through the year and we expect inventory to stay low.
Selling or buying a home in winter or early spring will be more advantageous than waiting for late spring or early summer, when most buyers begin their search. For more advice on selling your home now rather than waiting for warmer weather, check out “Why Winter is a Good Time to Sell Your Home”.
5. More people will move to the suburbs to find cost-effective housing
After the housing bubble burst, people were able to move back to the cities because it was much cheaper than previous years. Now we’ve seen a shift back to escalated prices for city apartments and condos. As home prices continue to rise, more buyers will move to the suburbs to find affordable housing.
Walkable neighborhoods and close amenities are major priorities for many buyers, but for the first time they are not able to find enough inventory that is affordable for them to buy.
As a result, many people are looking further out to find homes in the right price range – thus, bringing them to city-surrounding suburbs.
6. Consumer confidence trends will advance home sales
As 2017 anticipates wage growth and a stronger economy, home sales could exceed 6.3 million transactions. This is a significant increase from 2016. These trends and powerful performance of the stock market is predicted to fuel confidence and give people the assurance they need to proceed with a transaction.
People who were hesitant to spend money during the tumultuous and uncertain election year are now ready to open their wallets and put their money to use. This is a great sign for anyone looking to sell their home; the number of buyers in the market is only going to continue to rise.
While 2016 was one of the best years for real estate, forecasters predict 2017 will prove to be a positive year as well. The rising mortgage rates should not deter buyers from purchasing a home, but only prompt them to make a decision in a more timely fashion.
With home inventory still low, sellers have an advantage when looking to get a competitive offer on their home. 2017 will see far more millennial and baby boomer buyers than in years prior and the number of real estate transactions made this year should surpass the number made in 2016. These trends create a very exciting and fast-paced market for any buyer or seller!
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