It’s that time of year again: the time when nothing, and we mean nothing, is safe from a detailed new year’s forecast. The real estate industry is subject to plenty of expert predictions at the end of nearly every year, and the end of 2016 is no exception. Who knows how many of these estimations will come to pass – after all, who could have predicted some of the past year’s biggest news stories? (In that case, we’re not necessarily talking about real estate.) So without any further ado, here are five of the most intriguing real estate predictions for 2017.
The Market Will Be Equally Divided Between The Youngest And Oldest Home Buyers
It might sound crazy, but a reliable source has the data to back it up. According to the Realtor.com annual year end survey for 2016, next year’s real estate market will be powered by two generations that are roughly four decades apart: millennials and baby boomers. These are not only the two largest American generations in history; they are also two generations with enormous consumer power, and their members are immersed in respective stages of life where buying a home is often required. Because some of the country’s older millennials are starting to settle down and start families, Realtor.com predicts that 33% of the home buyers in 2017 will be millennials – and if interest rates weren’t already rising, the figure might be even higher. Meanwhile, many baby boomers are retiring, becoming empty nesters and traveling – so naturally, that means downsizing to a smaller home. With those two factors in play, it seems quite logical to pronounce the two groups the most important home buyers of 2017.
Certain Markets Will Spike In Real Estate Demand
Because home values are rising all across the country (as high as 6.7% in October), it’s the nation’s lower-priced markets that will thrive – and according to those surveyed at Realtor.com, the Midwest will lead the pack. Move over, Austin and Nashville – one of the most interesting real estate predictions for 2017 is that you can expect cities like Madison, Columbus, Des Moines, Indianapolis and Minneapolis to become next year’s hot relocation spots. Thanks to the industries that are emerging in these urban centers, they will become particularly popular among younger buyers looking to relocate for their careers. Tri-Cities should remain a hub for constant job growth, as the demand for highly educated employees remains at a consistent all-time high.
The Supply Of Homes For Sale Will Continue To Decrease – And Yet Home Sales Will Move Faster
According to the Realtor.com data, the close of 2016 has seen the inventory of homes for sale in the nation’s top 100 metropolitan markets down by 11% from the end of 2015. In 2017, the experts are predicting, we should expect to see more of the same. But ironically, a low supply of homes in local markets doesn’t necessarily correlate with slow home sales. Case in point: The median time it is taking for homes to sell in the nation’s top 100 metro areas is just 68 days, which is 11 days faster than the national average. That’s good news for real estate professionals, who tend to panic when inventory is low.
Your Worst Fears Will Not Come True
Whether you’re a home buyer or a real estate professional, seeing the price tags on properties for sale reach pre-recession “bubble” status is probably not your ideal scenario (if not an outright nightmare). But fear not, say forecasters setting their real estate predictions for 2017: The coming year will not be a time that home prices hit their peak. Here’s how they know: In July 2016, we saw home prices down in traditionally “ceiling” markets like San Francisco – and in that particular city, home prices decreased by 16% from July 2015. However, anyone interested in buying in secondary (more accessible) markets like Seattle, Portland or Denver may want to be prepared for some appreciation, as there was a slight increase in price throughout each of those markets over the past year. Taking that into account, the Realtor.com forecast for 2017 is a “more normalized” housing market with strong sales that still retains livable price growth.
And now, another indicator that 2017 will not be a bubble year: Consider what Redfin’s agents have predicted. According to an internal Redfin survey, 54% of respondents predict home prices will rise “somewhat” in 2017, but another 36% are expecting prices to level off. Either way, there are no solid predictions of substantial price inflation. Plus, it’s important to remember that lending conditions have vastly improved in the years since the recession. Subprime lending is not currently a concern; there is now plenty of regulation in place to ensure it. The inflation that occurred, occurred for reasons that just aren’t there anymore – thankfully.
Rents Will Be High (And That Means You’ll Buy)
For people who are on the fence about a home buying decision as 2016 comes to a close, it’s worth noting that the next year will usher in not only a rise in home prices – but also, a rise in monthly rents. Rents have been on an upward trend over the last several years, leading many renters to contemplate whether it makes sense to continue putting off a purchase. When you combine paying premium rents with missing out on the tax benefits of home ownership, it makes sense to conclude that many people are going to find themselves saying goodbye to the rental lifestyle and entering the housing market, whether it’s for the first time ever or after a long time away. In fact, Redfin’s chief economist said that rising rents just might be the primary catalyst pushing first time homebuyers into the market next year. “With rates at historic lows, buyers may be able to find a home with a monthly mortgage payment that is less than or equal to rent,” Nela Richardson said. Although only your real estate professional can directly advise you in regards to your personal situation, you may wish to consider whether paying high rent will continue to be worth it in 2017.
Whether you are looking to buy a home in the near future, you happen to be a real estate professional or you simply enjoy being plugged in to the latest in the market, these real estate trends for 2017 can inform your decisions for the coming year. Again, only your personal real estate professional can offer you customized advice – but regardless, knowing what’s around the bend can help you make better choices for your own real estate portfolio.
Copyright 2017. For more information, we welcome your calls or emails to Management 1 Tri-Cities Realty & Property Management at 800-205-M1TC or email@example.com.