Residential Real Estate Outlook in 2017
The year 2016 proved to be a hot one for real estate.
Home prices and sales showed some of their strongest numbers since before the economic downturn a few years ago.and mortgage rates were downright cheap but there’s no guarantee favorable conditions for buying and borrowing will continue in the months ahead. Consequently, it’s fair to ask the question: Will housing prices keep climbing into 2017?. Though no one can tell the future, the housing market forecast can help potential buyers make better decisions in 2017.
Home Prices Near Peak
Home prices continue to post steady year-over-year gains and are nearly back to pre-recession highs. In July, for example, the national median home price for single-family homes and condos collectively was $226,500 – an increase of 7% from a year earlier and the 53rd consecutive month with a year-over-year increase, but looking closer at market indicators reveals further truths.
After several years of steady and steep price growth, we are seeing indications that price growth is slowing and the market is normalizing. Housing market data indicate that home prices in August rose just 4.4% compared to 2015 — the slowest pace of the year.
Housing Market To Normalize
Based on these indicators, 2017 will bring a more normalized housing market : 54% predict prices will rise somewhat next year and 36% predict prices will level off. In 2017, we’re also projecting another modest increase in total home sales. However, three major factors continue to challenge the housing market’s recovery: tight credit, Limited inventory, and rising prices, which are beginning to create some affordability problems in certain markets.
Home Appreciation will be slow, but steady
This appreciation slowdown could be accelerated by rising mortgage rates but even without rising interest rates, some markets are now hitting affordability and inventory constraints that demand will slow down. And as demand slows, inventory will gradually increase in 2017. Many parts of the country could see a small dip in property values over the next six to 12 months, but real estate, for most people, should still be thought of as a long-term hold with a great tax write-off, forced savings plan, and long-term appreciation.
Rising Rent a deciding factor in 2017
Considering these housing market forecasts, many professionals say it’s wise for prospective home buyers to think about purchasing relatively soon. Mortgage interest rates remain low and housing price are rising. with rates at historic lows, buyers may be able to find a home with a monthly mortgage payment that is less than or equal to rent. The conditions that challenged first-time and millennial home buyers this spring are starting to ease. There are fewer bidding wars and less of a need to escalate significantly above the list price to get an offer accepted. And the pace of the market is also slowing, which helps buyers since they can now afford to be more patient.
Should Buyers hold Their Purchase?
Purchasing sooner versus later can be smart — so long as you view the home as a long-term investment. It’s probably not the best time if you are counting on your home value going up by another 20 or 30% in the next three years. The rock-bottom interest rates make it a good time to be a borrower, but don’t expect interest rates to rise dramatically in 2017. Trying to time the housing market can be as frustrating as trying to time the stock market, waiting for the next real estate crash and prices to go lower really isn’t a good strategy; it’s much more likely that home prices will continue to go up over time and that interest rates will ultimately rise.
Home prices and sales showed some of their strongest numbers since before the economic downturn a few years ago.and mortgage rates were downright cheap but there’s no guarantee favorable conditions for buying and borrowing will continue in the months ahead. Consequently, it’s fair to ask the question: Will housing prices keep climbing into 2017?. Though no one can tell the future, the housing market forecast can help potential buyers make better decisions in 2017.
Home Prices Near Peak
Home prices continue to post steady year-over-year gains and are nearly back to pre-recession highs. In July, for example, the national median home price for single-family homes and condos collectively was $226,500 – an increase of 7% from a year earlier and the 53rd consecutive month with a year-over-year increase, but looking closer at market indicators reveals further truths.
After several years of steady and steep price growth, we are seeing indications that price growth is slowing and the market is normalizing. Housing market data indicate that home prices in August rose just 4.4% compared to 2015 — the slowest pace of the year.
Housing Market To Normalize
Based on these indicators, 2017 will bring a more normalized housing market : 54% predict prices will rise somewhat next year and 36% predict prices will level off. In 2017, we’re also projecting another modest increase in total home sales. However, three major factors continue to challenge the housing market’s recovery: tight credit, Limited inventory, and rising prices, which are beginning to create some affordability problems in certain markets.
Home Appreciation will be slow, but steady
This appreciation slowdown could be accelerated by rising mortgage rates but even without rising interest rates, some markets are now hitting affordability and inventory constraints that demand will slow down. And as demand slows, inventory will gradually increase in 2017. Many parts of the country could see a small dip in property values over the next six to 12 months, but real estate, for most people, should still be thought of as a long-term hold with a great tax write-off, forced savings plan, and long-term appreciation.
Rising Rent a deciding factor in 2017
Considering these housing market forecasts, many professionals say it’s wise for prospective home buyers to think about purchasing relatively soon. Mortgage interest rates remain low and housing price are rising. with rates at historic lows, buyers may be able to find a home with a monthly mortgage payment that is less than or equal to rent. The conditions that challenged first-time and millennial home buyers this spring are starting to ease. There are fewer bidding wars and less of a need to escalate significantly above the list price to get an offer accepted. And the pace of the market is also slowing, which helps buyers since they can now afford to be more patient.
Should Buyers hold Their Purchase?
Purchasing sooner versus later can be smart — so long as you view the home as a long-term investment. It’s probably not the best time if you are counting on your home value going up by another 20 or 30% in the next three years. The rock-bottom interest rates make it a good time to be a borrower, but don’t expect interest rates to rise dramatically in 2017. Trying to time the housing market can be as frustrating as trying to time the stock market, waiting for the next real estate crash and prices to go lower really isn’t a good strategy; it’s much more likely that home prices will continue to go up over time and that interest rates will ultimately rise.
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