2016 was an active year for the real estate industry. Last year also saw home prices rise steadily for ten months in a row, peaking in October with gains of 5.61% coming just before the traditionally slow winter holiday season. 2017 will see the market normalize, slowing growth but continuing its rise, albeit not as dramatically as last year. Baby Boomers and Millennials will continue to be a force in the market. And home buyers will want to pay close attention to an unpredictable new administration in the White House, which could pass legislation that would directly affect the housing market
There will be an increase in home sales as even more Baby Boomers are now willing to sell again
Most Baby Boomers are now at retirement age and are looking to downsize or move into retirement communities or condos to better enjoy their Golden Years. With home values surging in 2016, Boomers are now feeling like they have recovered much of the value their homes lost from the last decade's housing market decline and putting their homes up for sale. This new market confidence will see a sizable increase of houses available to buyers this year.
Home buyer demand will rise as more Millennials enter their 30s
Millennials have already made up a larger percentage of home buyers than Gen Xers for four straight years, and more even more Millennials will be hitting their mid-30s in 2017. With lowering unemployment rates and a stabilizing economy, more of them will look to start families and purchase their first homes. The Fed slowly continues to increase interest rates, but the rates remain historically low. However, home prices continue to climb, making it a potentially frustrating market for first-time home buyers in some urban areas. The uptick in Baby Boomers’ homes on the market could help curtail some of this, but it is still a seller’s market in today’s real estate world. Zillow has forecast home values rising to 3.6 percent in 2017. It would be wise for Millennials to buy now rather than wait as the market creeps higher.
Home Buyers will look to suburbia to find more affordable homes
After the housing downturn a decade ago, many home buyers were able to find cheap homes in desired city centers. But that is no longer the case. While wages in big cities continue to see increases, homes in those cities are entering the market at prices that are out of reach to many first-time buyers. Not only are homes in urban areas getting more and more expensive, but they are also getting smaller as builders seek to recoup profits lost during the housing downturn and subsequent slow recovery. However, many affordable homes can be found in the suburbs, and Millennials will come in droves to find these lower cost options outside the bustle of the city to start their families.
First-time homebuyers may have a silver lining in an increasingly overpriced market
The new administration in the White House has called for a review of the regulations placed on financial institutions in the Dodd-Frank Act. A softening of these regulations could result in more relaxed lending by banks. No one expects a return to the free-wheeling lending that led to the Great Recession, but a more measured rolling back of regulations may help more first-time home buyers compete for homes previously outside of their budget. A change in rules may or may not happen, but it would be in the best interests of potential home buyers to pay close attention.
2017 may prove to be just as difficult to predict as 2016. In this uncertain era of continuing recovery from the 2008 Recession, it has never been more important to put your trust in an experienced real estate agent who can help you navigate the current market. The Northrop Team is here to help you get the right home in the right neighborhood to fit your budget and your lifestyle.