The big holidays are right around the corner. Along with the eggnog, holiday shopping, and countdown to the new year, comes the predictions of the housing market for 2017. Luckily for you, Windermere’s Chief Economist, Matthew Gardner, has been giving his annual forecast to a variety of real estate and financial organizations. It’s always difficult to predict the future, but based on what we do know today, here are some thoughts on the current market and what you can expect in the new year.
Housing Affordability: This continues to remain a big concern for many west coast cities, as some markets have seen home prices escalating above income growth. We all know that this is unsustainable over the long term, so, luckily, it is believed the rate of growth will begin to slow and price appreciation will soften.
Housing Supply: In 2016, home prices and sales rose while listings remained the same. Hopefully, in 2017, there will be an increase in the number of homes for sale, hopefully, relieving pressure.
First-Time Home Buyers: First time home buyers should be abundant come 2017, and it’s a good thing. First-time home buyers are mandatory to achieving a more balanced housing market. While rising home prices and competition will act as an obstacle to some first timers, the increase in housing inventory should help alleviate some of the challenges.
Interest Rates: Although interest rates remain remarkably low, they have begun to increase since the election, and they will continue to increase through 2017. Matthew Gardner believes the 30-year fixed rate to increase to about 4.5 percent by year’s end. Yes, this is well above where interest rates are currently, but it’s still very low.
Alas, it is continually heard that there are concerns about an impending housing bubble. While price growth should grow in certain areas, the floor should not fall on housing prices. There should be a slight shift towards a more balanced market in the year ahead. So, all in all, 2017 shall provide yet another good real estate market.