Predictions For 2017
Various real estate entities have weighed in with their prognostications for the 2017 housing market. Most observers expect home sales and prices to moderate in the coming year. They say suburbs will make a comeback while the days of historic low rates are over. Of course, a lot depends on the actions of the new administration. Although President-elect Donald Trump said little about housing during the campaign, some of the issues he highlighted will have an effect on the residential real estate market, such as infrastructure spending, regulatory and tax reform, and immigration policies.
Realtor.com predicts “a year of slowing, yet moderate growth” with its fourth quarter Housing Opportunities and Market Experience Survey finding that 70 percent of people believe that now is a good time to buy a home. Millennials and boomers will dominate the market and Realtor.com expects these two massive demographic groups to power demand for the next decade. Home prices will grow at 3.9 percent annually, compared to an estimated 4.9 percent in 2016. Inventory is down an average 11 percent in the top 100 metro markets, and it is not expected to improve next year. Homes will be selling 14 percent faster. The survey also found that 70 percent of people say now is a good time to buy a home.
Zillow says the homeownership rate will bounce back even as renting becomes more affordable. The real estate data firm also sees a reversal of a recent trend, predicting that “more Americans will drive in from the affordable suburbs for work, despite urban development efforts.” Additional predictions include: Cities will focus on denser development, more millennials will become homeowners, and buyers of newly built homes will have to spend more to cover rising costs of construction. “Those looking for more affordable housing options will be pushed to areas farther away from good transit options, in turn leading more Americans to drive to work,” said Svenja Gudell, Zillow chief economist.
Redfin predicts “strong buyer interest, better access to credit and a modest and much needed increase in inventory that will allow home sales to grow but not as much as in 2016.” Redfin expects median home sale prices to rise 5.3 percent annually in 2017 compared to 5.5 percent this year and existing home sales to increase 2.8 percent annually in 2017 compared to 3.4 percent last year. 2017 will be the fastest real estate market on record as homes stayed on the market an average of 52 days this year, according to Redfin. It expects them to sell even faster in 2017. Redfin expects rates on home loans to rise but no higher than 4.3 percent on the 30-year fixed rate next year.
The Mortgage Bankers Association predicts that rates on home loans will rise slightly but remain low, purchase applications will increase and refinance applications will decrease. “Strong household formation coupled with further job growth, rising wages and continuing home price appreciation will drive strong growth in purchases in the coming years,” said Mike Fratantoni, MBA’s chief economist. MBA expects rates on the 30-year fixed rate loans to remain below 5 percent through the end of 2018. “Historically low and, in some cases, negative rates around the world continue to put downward pressure on long-term U.S. [bond] rates, keeping them lower than the domestic growth environment would otherwise warrant,” Fratantoni said.
Source: The Washington Post