5 Trends Shaping Real Estate in 2017
It looks awfully good in the Midwest. As 2016 comes to a close, Realtor.com’s Cicely Wedgeworth and the site’s data team analyzed the key market indicators. These indicators give us some insight into what the housing market will look like over the next year. Wedgeworth presents: 5 trends shaping real estate in 2017.
5 trends shaping real estate in 2017:
- Millennials and boomers will move markets: Millennials and baby boomers are the two largest American generations in history. Marriage, having children, retirement, and becoming empty nesters motivates these people to buy a home. Jonathan Smoke, chief economist at Realtor.com, predicts that millennials will make up 33% of buyers in 2017. That’s lower than his original estimate due to those increasing interest rates. The Millennials are caught between rising interest rates on mortgages and increasing rents. They desire to capture increasing equity with rising home prices.
- Millennials will look to the Midwest: While the financial picture may look grim for our youngest home buyers, the Midwest, still looks good. We believe Midwestern cities will continue to beat the national average based upon millennial home buyers in 2017. Leading the pack are Madison, WI; Columbus, OH; Omaha, NE; Des Moines, IA; and Minneapolis.
Millennials are a sizable group; almost 74 million people.
The Pew research center defines millennials as between ages 18 to 34 in 2015. The oldest “Millennial” was born in 1981. The group is projected to number 75.3 million. That’s bigger than the 74.9 million Boomers or the Gen X population. Immigration is expected to add to the total. The Millennial population is projected to peak in 2036 at 81.1 million.
- Price appreciation will slow down: One of the 5 trends shaping real estate in 2017 is price appreciation. Nationally, home prices are forecast to slow to 3.9% growth year over year, from an estimated 4.9% in 2016. Prices are still likely to go up at an above-average pace as long as supply remains so tight. The inventory problem is not going away.
- Fewer homes, fast-moving markets: The inventory of homes available for sale is currently down an average of 11%. The conditions limiting home supply are not expected to change in 2017. The median age of inventory, or the time it takes a home to sell, is currently 68 days. That is 14%, or 11 days, faster than the national average.
- The West will lead the way: We’re expecting metropolitan markets in the West will see a price increase of 5.8% and sales increase of 4.7%. That would be much higher than the U.S. overall. These markets also dominate the ranking of the realtor.com 2017 top housing markets. Making up five of the top 10 markets on the list include Los Angeles, Sacramento, Riverside, CA; Tucson, AZ; and Portland, OR. California could also skew the Case-Schiller index making housing look better than it is nationally.
The 5 trends shaping real estate in 2017, does not include what affect inflation and rising interest rates will have on markets. Another unknown. What affect will President-elect Trump have on the economy?
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