Real Estate Rundown: What to Expect in 2017
For lots of people, 2016 was a year of great promise for real estate: historically low mortgage rates and near-zero interest rates, coupled with a frenzied interest in housing in many U.S. markets, where home prices have appreciated beyond expectations.
While it’s true we’ve largely recovered from the housing crisis, the U.S. housing outlook for 2017 brings a lot of questions. Builders are not producing enough homes to meet demand. Mortgage rates are still low. Inventory is tight. Affordability is tough, especially for first-time homebuyers. What does it all mean?
Here are seven U.S. housing market trends to expect this year.
MORE NEW HOMES
Homebuilders are moving at a fast and furious pace, trying to keep up with demand. Last year, groundbreakings were well over one million, a 5 percent increase over 2015. The trend is continuing in 2017, with builders’ momentum fueled by higher wages, increased consumer demand and easier-to-get credit.
HOME PRICES INCREASING MORE SLOWLY
We saw a 5.61 percent increase in national home prices last year, and experts predict that trend will continue this year, but at a slower pace. The analysts at Redfin forecast median home sale prices to gain 5.3 percent in 2017. At Zillow, they’re predicting the median home value to rise 3.2 percent. By comparison, their home value index rose 6.5 percent in the year ending November 30, 2016.
VOLATILE MORTGAGE RATES
Rates are still low, looking at historic standards, but expect mortgage rates to be volatile in 2017. Experts aren’t sure where to place their predictions, but most are saying between 3.75 percent and 4.6 percent for the 30-year fixed rate, which is pretty close to where it is today. Just watch out for a bumpy ride along the way.
For Americans earning the median wage, it will be harder to find and afford a home, even though wages are expected to increase in our large cities this year. This hits first-time homebuyers hardest, who are also frustrated by the shortage in low- and moderately priced inventory in markets across the country.
Some good news? This year, government-owned mortgage companies Fannie Mae and Freddie Mac will start backing bigger mortgages for the first time in more than 10 years. This should make it easier for buyers in expensive markets, such as the coasts, to finance their homes.
COMPETITION WILL INCREASE
In 2017, it will continue to be a buyer’s market across the country. Last year, the average time on the market for a typical home was just 52 days, a full week faster than 2015. In fact, it’s the fastest year measured by Redfin since the site started keeping track of the stat in 2009. The experts there say houses in 2017 will have an even shorter average time on market, which means fierce competition, especially for first-time homebuyers looking at low- and moderately priced inventory.
MILLENNIALS STEP UP
If you’re stuck with the image of millennials living at home with Mom and Dad, think again. This age cohort, born after 1980, will be making up a larger percentage of the buyer pool in 2017. In fact, Zillow estimates about half of all buyers are under 36. The experts over at Redfin predict many millennial buyers will start looking to live away from the coasts, where costs are high, to more inland markets, where affordability is greater.
POLITICAL UNCERTAINTY MEANS HOUSING UNCERTAINTY
Last July, the U.S. Census Bureau came out with the news that U.S. homeownership rate had hit its lowest level since they began measuring it in 1965. President Trump has emphasized again and again his desire to cut taxes and spend on infrastructure, which could be good things for the housing market. But we don’t know where he wants to see interest rates go or how he plans to implement these changes.
Also, what about immigrants and minorities who either own houses or are looking to buy? How will they be affected and will they choose to stay in the buying market? Regardless of the answers, these questions will breed uncertainty in the housing market (and beyond) in 2017.
With all of these changes happening in the real estate market, it’s important to do plenty of research before selling or buying a home. By educating yourself, you can learn what decisions will be best for you without working with a real estate agent. Choosing to buy or sell on your own will help you save the money that you’d otherwise be spending on real estate agent fees. If this is the best option for you, ForSaleByOwner can provide you with all the tools you need to manage the buying or selling process on your own.