4 Trends that will Shape the Remainder of 2017
According to numerous real estate forecasts, the remainder of 2017 national real estate market is predicted to slow compared with the past two years, across the majority of economic indicators studied. But maybe “slow down” isn’t quite the right description.
While there have been a lot of questions regarding the uncertainty of the stock market and other investments, the real estate forecast for the remainder of the year continues to look stable, albeit with a few expected changes.
Here are 4 changes that real estate forecasters expect to see throughout the remainder of 2017.
The Continued Rise and Popularity of Medium-Sized Cities
One of the primary stories of the current economic recovery is that major economic cities like New York, Seattle, and San Francisco have seen property values rise as workers flock to these locations to take advantage of high-paying jobs. However, this trend has put a strain on those cities’ real estate markets. This is due to new construction is often unable to keep pace with demand due to geographic constraints, or restrictions imposed by local government regulations.
That’s why more and more younger potential home buyers are finding themselves attracted to medium-sized cities, which may not have the same professional opportunities as their larger counterparts, but provide housing affordability. Cities like Raleigh, N.C., and Fort Collins, Colo., have seen building permit issuance soar over the past six years as they attract younger adults seeking cheap rents and lower asking prices. Expect the trend to continue in 2017.
Price Appreciation will Begin to Slowdown
Across the country, home prices are forecast to slow to 3.9% growth year over year, from an estimated 4.9% in 2016.
Of the top 100 largest metros in the country, 26 markets are expected to see price acceleration of 1 percentage point or more, with Greensboro, NC; Akron, OH; and Baltimore experiencing the largest gains. Likewise, 46 markets are expected to see a slowdown in price growth of 1 percentage point or more, with Lakeland, FL; Durham, NC; and Jackson, MS, undergoing the biggest downshift.
The West will Lead the Way in the Real Estate Game
Metropolitan markets in the West are expected to see a price increase of 5.8% and a sales increase of 4.7%, which is much higher than the U.S. overall. These markets also dominate the ranking of the realtor.com 2017 top housing markets (more on that tomorrow), making up five of the top 10 markets on the list: Los Angeles, Sacramento, and Riverside in California; Tucson, AZ; and Portland, OR.
An Increase in Rates
In December, the Federal Reserve raised interest rates for only the second time since 2006, and a majority of the members of the Fed’s rate-setting board predict there will be three more increases coming in 2017. These decisions will cause mortgage rates to rise, potentially making it more difficult for prospective home buyers to be able to afford the home of their dreams. But don’t worry too much about this trend. The expected mortgage interest rates are not expected to increase more than 4.3% on a fixed term rate over 30 years.