After a surprising year in 2016 marked by attention grabbing events like Trump’s presidential win and Great Britain’s decision to leave the European Union, it finished off with an economy and wages that continued to grow, as well as interest rates that remained low. What does 2017 have in store for the housing market? Some predictions are below.
1. The home buyer persona changes
Millennials will lead the charge to become homeowners with about one out of every three falling into the age group. At the other end of the spectrum, baby boomers will be split between those who downsize and those who upgrade to provide room for visiting friends and family.
2. Mortgage rates rise
Interest rates that started rising in 2016 will continue to do so in 2017. This hike in rates could make it more difficult for those who had been saving up to move which means that rental properties will continue to be in high demand. This is especially true in those markets that are considered to be “hot” such as California, the Pacific Northwest and Nevada.
3. The demand for affordable housing increases
While affordable housing has been at a premium for a number of years now, don’t expect 2017 to bring any relief from that demand. Expect many new homes to fall into the luxury category and cost enough to price first time home buyers out of the equation. When coupled with immigration policies that are more restrictive with the results being that the construction industry is functioning only at 60 percent of its capacity, many people will turn to renting as an affordable option.
4. Good news for renters and property owners
While rent prices are expected to become more moderate in 2017 after years of explosive growth, the actual rental rate is expected to continue its upward trajectory. In fact, for 2017 it should be above the 20 years average, making this year a good one for both renters and property owners.