This New Year holds a lot of uncertainty for many of us as our country faces unprecedented changes. As we all know, the last several years have not been great for the housing market in many areas. According to a forbes.com report written by staff writer Samantha Sharf, 2016 was encouraging for the housing market. Home values increased while mortgage rates remained low. But will this trend continue for 2017? Sharf summarizes eight predictions gleaned from experts in the industry. For the full article, click here. Below is a brief review of the findings:
- Prices will continue to increase but at a slower rate. Buyer demand will remain strong and there will be a slight increase in homes for sale. Median home values are expected to increase approximately 3%, as predicted by Zillow, from $192,500.
- Median income earners will be less likely to find affordable homes. This is sad news for potential first-time homebuyers. Two factors come into play here:
- Long gone are the days of subprime mortgages and loan approvals with little or no documentation. Lenders have upped their requirements for loan approval making it harder for median income earners to qualify for a loan.
- The available inventory of homes in the lower price brackets has been on a five-year decline. Builders are not expected to significantly increase their inventory of starter spec homes in 2017.
- Mortgage rates will be unpredictable. Global political events, which I will not discuss in detail here, have set interest rates atwitter (no pun intended). Federal Reserve officials hint at three mortgage rate increases for 2017.
- The availability of credit might Might is the operative word here. And just because more credit is available does not mean homebuyers will be able to afford it or qualify for it (re: #2 above).
- A buyers’ market for 2017? A slight increase in supply is predicted. This could help stabilize home prices. However, an increase in mortgage rates could jeopardize inventory as homeowners hold on to their lower rates rather than sell and finance a new home at a higher rate.
- Millennials will rule the market. This demographic—those born after 1980—now accounts for the largest adult segment and a major share of the adult workforce. This group of homebuyers will seek mortgages for the first time while looking for affordable homes to buy. Does anyone see a disconnect here?
- Let the games begin! The real estate market is competitive if it is anything. 2017 should be no different. Average days on the market (DOM) were about 52 in 2016. That is a significant improvement from 2009. The DOM is expected to improve even more in 2017.
- Uncertainty in the political arena will continue. The debate continues as to how promises made by the Trump Administration will be implemented and how the policies will affect the housing market.
What are your feelings on the housing market? Are you hopeful or skeptical?
Note: Some of the content here reflects my opinion and not that of forbes.com, Scharf, or those who contributed to the article. Click here to see Sharf’s full article.