8 Predictions From The Experts
Prices will continue to rise but more slowly
Prices rose every month last year through October with the largest gains in the later half of the year. Nationally prices increased by 5.61% in 2016. Experts predict prices will continue to climb, but gains will be slow. With current high consumer confidence and a low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends.
Affordability will worsen
Wages are expected to grow in American’s big cities this year, but the share of homes affordable to someone earning below the median income is not. Affordability will be negatively impacted by rising prices, rising interest rates and a shortage of low to moderate priced homes.
Mortgage rates will be volatile
Two major political events of 2016 set mortgage rates moving in opposite directions. In June BREXIT happened which put rates near a record low. In November the election of Donald Trump had the opposite effect sending rates above 4% for the first time in two years.
Credit availability will improve-maybe
President Trump has indicated that they hope to roll back much of the post-crisis financial regulation laid out in the Dodd-Frank act. In theory, this could open up banks to lend more freely to a wide-range of would be buyers.
Supply will improve but remain short
A complete turnaround is unlike in 2017 but there are some signs the coming year could see a small bump in housing supply- at least on the new home front. Homebuilder sentiment picked up late3 last year. Strong demand is encouraging building.
More millennials will become buyers and renters
According to Zillow half of all buyers are under age 36. Not every economist agrees with this assessment, however it is clear that Millennials will continue to make up a large and growing portion of the buyer pool. Of course much of this is due to the fact that Millennials–adults born after 1980–are now the largest adult generation and make up the greatest percentage of the workforce. Redfin expects Millennial homebuyers will move from the coasts to “inland markets” where starter homes are more affordable.
Competition will remain fierce
In 2017 sellers will maintain the edge over buyers as demand is expected to increase. In 2016 the typical homes stayed on the market for just 52 days, about a week faster than in 2015 and the fastest year since Redfin began measuring in 2009. The brokerage expects 2017 to be even faster.
Political uncertainty will be replaced with policy uncertainty
Experts agree that three of President Donald Trump’s policy priorities could meaningfully impact the housing market: his pledges to spend more on infrastructure, to cut taxes and to crack down on immigration. The consensus is that in the very short term any moves in these three areas could have a neutral-to-positive impact on the housing market.