Real Estate Articles

Realtor website forecasts moderate growth in 2017 housing market

The 2017 housing market will see moderate growth in the nation's housing market, but slower housing gains compared to the last two years. Interest rates are expected to rise due to higher expectations for inflation, according to realtor.com's 2017 housing forecast. The official site of the National Association of Realtors expects the homeownership rate will stabilize at 63.5 percent after bottoming at 62.9 percent in 2016 and next year will see a changing buyer demographics.

In its "2017 Housing Review," realtor.com forecasts home prices to increase 3.9 percent and existing home sales to increase 1.9 percent to 5.46 million homes. Interest rates are expected to reach 4.5 percent. New home sales are expected to grow 10 percent, while new home starts are anticipated to increase 3 percent. The forecast is based on GDP growth of 2.1 percent, a 2.5 percent increase in the consumer price index, and unemployment declining to 4.7 percent by the end of the year.

Although a stronger economic and wage growth are expected next year, realtor.com® predicts first-time home buyers will face new hurdles. Higher mortgage rates will make qualifying for a mortgage and finding affordable inventory more challenging for home buyers.

"We don't expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016. However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year," said Jonathan Smoke, chief economist for realtor.com.

According to Karen Trolan, president of the Silicon Valley Association of Realtors, "A qualified Realtor can explain price differentials in the market against the backdrop of expected rate increases, help bring the highest value for a property, and prevent a buyer or seller from being locked out of their optimal price for purchase."

Realtor.com sees the following five key housing trends for 2017:

1. Millennials and boomers will dominate the market –– Millennials and baby boomers will comprise majority of the market, but because of rising interest rates, the millennial share of the market will be 33 percent, and baby boomers, who are less dependent on financing, 30 percent.
2. Midwestern cities will continue to be hotbeds for millennials – Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis are the leading hotbeds. Already this year, average millennial market share in these markets is 42 percent versus the U.S. average of 38 percent.
3. Slowing price appreciation – Of the top 100 largest metros in the country, 26 markets are expected to see price acceleration of 1 percent or more with Greensboro-High Point, N.C.; Akron, Ohio; and Baltimore-Columbia-Towson, Md., experiencing the largest gains and Lakeland-Winter Haven, Fla., Durham-Chapel Hill, N.C.; and Jackson, Miss., undergoing the biggest shift to slower price appreciation.
4. Fewer homes on the market and fast moving markets – Inventory is currently down an average of 11 percent in the top 100 metros in the U.S. Conditions limiting home supply are not expected to change in 2017.
5. Western cities will continue to lead the nation in prices and sales – Western metros in the U.S. are forecast to see a price increase of 5.8 percent and sales increase of 4.7 percent, much higher than the U.S. overall. These markets also make up five of realtor.com's 2017 top housing markets (Los Angeles, Sacramento and Riverside, Calif., Tucson, Ariz., and Portland, Ore.) and 11 of the top 25 (Colorado Springs, Colo.; San Diego; Salt Lake City; Provo-Orem, Utah; Seattle. and Oxnard-Thousand Oaks-Ventura, Calif.).
    

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please email or call the SILVAR office at (408) 200-0100.

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