Are you looking to sell your home in 2017? Learning everything you can about how the real estate market is likely to go this year is key to giving yourself the best chance at achieving that goal. You should always take housing market predictions with a grain of salt – such a vast and complicated thing is never thoroughly understood at any moment. Real estate market predictions are always just the best extractions of information we can get now with the given data. That being said, you can be good enough to get within the ballpark, so to speak, of what the market will do. With a new presidential administration’s housing policy about to kick in, one thing is for certain; there will be changes. Everything that was true in 2016 will not remain the same.
That much written about group of young adults, the millennials, are well known for not reaching many of the same milestones of life that previously denoted American adulthood. The creation of nuclear families and all the big-ticket purchases that went along with that are the kinds of things that lagged with this generation. That is looking like it is finally going to change to a degree. As the job market has improved the most for people in the millennial age range- you should expect more home purchases among this cohort.
And where will most those home purchases occur? Millennials will be choosing the mid-west more often since they are closer to the many of the Universities they are graduating from and offer lower home costs than the coastal markets.
Most the affordable housing left will be in the suburbs. Not necessarily the more established suburbs, but the newer suburban communities that have been sprouting on the outskirts of major cities for the last couple decades. These communities are the only option for maintaining a connection to the city. The commute will be worth it to 2017’s home buyers.
For those not willing to go that far, smaller houses closer to public transport on the outer edge of major cities appear to be the new trend in home building. These houses will be smaller so they cost less and more can be built in the space.
Lower Home Value Appreciation
Home values are expected to increase by three and a half percent in 2017, down from 2016’s nearly five percent increase. This just means that the housing market is stabilizing. This brings the new year more in line with the historical norm of the last fifty years.
While the rate at which homes appreciate will be lower, it will continue to happen – especially for the western coast of the nation. California, Oregon, Arizona, and Washington are all likely to see the highest gains in home value for 2017.
Higher New Home Costs
There is currently a shortage of labor in the new home construction industry which has led to hotter competition among construction companies on wages. These wage hikes are passed down to the home buyer, of course. Further adding to this, if President-Elect Donald Trump makes good on his promise to crack down on illegal immigration, the home construction labor market will get even more expensive since this is an industry that employs lots of undocumented workers.
Higher Interest Rates
After the housing market crashed, the Fed kept rates at historic lows. This is about to end soon. It has already been announced that there will be three more increases to the lending rate this year alone. If you plan to buy a home or sell a home, do it sooner rather than later!
Lower Rental Costs
Renting an apartment will finally become more affordable in 2017. Most people’s income is rising faster than the cost of rent for once. The demand for rental units has been slowing down due to an increase in home buying, multiple adults deciding to share apartments, and an increase in the construction of multi-family units.