5 Bold Predictions For Housing In 2017

5 Bold Predictions For Housing In 2017

2016 was a good year to buy a home. Interest rates stayed historically low. Total home sales were up 5% in the first half of 2016, and the total annual growth is expected to cap off at 4.7%. Most encouraging is the record 34% first-time homebuyers in Q3 2016, up from 29% in 2015.


For 2017, a market softening has been predicted, most likely led by the imminent interest rate hikes, Fed supported or not. But this doesn’t mean you should sit on the sidelines. There still could be opportunities for buyers and sellers alike.


1. Price correction, particularly in overheated markets

As interest rates gradually edge up, naturally we will see buyers retreat. Some homeowners with HELOCs (home equity line of credit) will see significant increases in their payments and may be forced to sell – many not afforded the patience to wait for a top offer. We saw some dramatic heating up recently in neighborhoods such as Liberty Wells, the Aves and Sugar House, where wages in the State have not keep up with fast-rising home prices. Instead of meeting the record asking prices, some buyers in these areas are looking for deals in the city outskirts.


What’s interesting is that even while Fed-led rate hikes have not kicked in, an impending correction was starting to get baked in. In a quarterly Modern Homebuyer Survey put together by Housing Wire, 63% of all homeowners and 8 in 10 Millennial homeowners think the current home prices are inflated and a bubble is looming. There are indications some homeowners are hesitant to sell their current home because they don’t want to pay inflated prices for their next home, then watch prices drop shortly after they buy.


2. Lower housing inventory

One of the biggest housing stories of 2016 was low inventory, down near double digits (– 9.7% for mid-tier and -8.9% for entry level homes). It will take some time for new home construction to close the demand gap. Home refinancing is forecasted to be down 41% in 2017 after a banner year and homeowners tend to stay put for at least a couple years after they refinance, which will keep resale inventory down. But of course, people still have to live their life; everyday people move for jobs or for personal reasons, some even after they refinanced. If you have a desirable home to sell at the right price, you could do very well with less competition in 2017.


3. Higher housing demand among Millennials

While there was never any doubt the largest generation ever would be a driving force in other product categories, many experts didn’t know if Millennials would eventually embrace homeownership or remain lifelong renters, especially given their mobile lifestyle and job tenures. Latest research indicates Millennials do have a strong desire to own home, and they are planning to spend big. 4 out of 10 Millennials (nation-wide) who plan to buy soon plan to spend $500,000+ on their next home. Now, part of this could be wishful thinking, but Millennials are earning higher wages, and more are moving to top urban areas where home prices are higher. These are all positive trends for the housing market. Affordability is still a top concern, with 62% not confident they can afford a down payment. We expect to see more Millennials take advantage of low down payment mortgages, as they become informed about these new programs.


4. Boomerang homebuyers

It was nine years ago at the height of the housing crisis when millions of Americans filed for foreclosure, bankruptcy and watched their credit severely tarnished. After the seven-year black-mark period, it is estimated 2.5 million former homeowners with delinquent payment history could return to the market in 2017 with near prime credit, eligible for a new mortgage. Predictions are that this group of low-hanging fruit potential buyers fundamentally believe in the virtues of homeownership, however, given their negative experiences and long road back to financial health, they will likely be a highly cautious buyer. Sellers should focus on a strong reassurance message when working with this unique and sizeable market, as they will be more cautious this go around.


5. The Trump era

We can’t offer housing predictions for 2017 without addressing the elephant in the room. There were widespread apocalyptic market warnings for a potential Trump win, which now appear to be mostly hype. Equity investors pushed the market higher as they expected increased defense and infrastructure spending, potentially higher wages, a pro-bank administration, which should all bode well for housing. However, the election result did trigger a sell-off in the bond markets, pushing mortgage rates higher past the psychological barrier of 4% for a 30-years fixed mortgage in less than one week.


** Bonus: A new era for housing professionals

Finally, as we enter a new presidential era, there are other factors we believe will make 2017 a notable year for housing. Many market assumptions that we operated on in much of 2015 and 2016 will now change in 2017:


  • Interest rates will not stay at historically low levels;

  • We will likely see inflation creep higher;

  • Focus will shift from refis (leaving an estimated $400B+ hole) to new purchase 
homes;

  • Upgrade homebuyers – many of whom have recently refinanced and planned to stay put – will decrease;

  • Millennials will start buying amid skyrocketing rents, bringing with them reserved fiscal attitudes, self-reliance, and prolific use of digital and social platforms to buy homes.


As in any market, certain factors spell “buyer’s market” and others “seller’s market”. There will be great deals to be had as some sellers are forced to move, and sellers can continue to count on low inventory for a little while longer. Our biggest prediction for 2017 is that the market will continue to be very volatile, and most opportunities will continue to move quickly. Working with an agent will be more important than ever for assistance with navigating these changing times.



Credit: Joe Melendez - CEO of ValueInsured


Source: http://www.housingwire.com/blogs/1-rewired/post/38599-here-are-6-predictions-for-housing-will-perform-in-2017


Spencer Clawson Headshot
Author:
Phone: 801-636-8426
Dated: December 7th 2016
Views: 787
About Spencer: ...

Property Search








RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

Lift Realty

Sandy, UT
801-448-0121