The housing market is changing all the time. In order to make judgments regarding the market’s overall health and forecast changes to things like mortgage rates, property values, and inventory availability, real estate professionals like to keep an eye on current trends. In this post, we’ll explore five of the major trends to watch in 2017.
Rising mortgage rates and decreased affordability:
As a result of rising interest rates from the Federal Reserve, mortgage rates are likely to rise in 2017, causing trouble for prospective buyers seeking a loan. Realtors are generally concerned about decreasing home affordability, taking over the former top concern of low inventory. Inflating home prices and slowing economic growth combine with the rise in mortgage rates to create new financial worries.
Continuing growth for medium-sized cities:
For much of recent history (during the last period of economic recovery, that is), a lot of the real estate growth has occurred in the largest cities (New York City, San Francisco, etc.) due to the promise of well-paying career opportunities. However, this has also driven up property costs.
For this reason, young people have begun to turn to slightly smaller, mid-sized cities where opportunities and modern comforts are still plentiful but prices are far more affordable. This trend is expected to continue throughout 2017.
Because lenders’ mortgage lending standards have begun to loosen up again, somewhat, mortgage credit is expected to become more available in the coming months. This is likely to be beneficial for first-time homebuyers for whom rising mortgage rates could become an issue.
Foreign buyers will continue to play a role:
In major metropolitan areas like Los Angeles and New York, large parcels of real estate have been picked up more and more by foreign buyers—particularly from China. These buyers are looking for foreign places to store wealth and earn good returns, which they can’t necessarily do back home. This influx of foreign buying is another reason real estate in those areas keeps rising in price.
An increase in new homes:
In just the last couple of years, the construction of new homes has increased significantly. Between 2015 and 2016, data shows that the annual average rate of new construction rose by approximately 5%.1 This trend is expected to continue throughout the next year.
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