The US housing market’s economic recovery is expected to enter a new stage next year, with the homeownership rate bouncing back from historic lows. However, President-elect Donald Trump’s immigration policies could have a drastic effect on home prices next year, according to a new forecast by the online search portal Zillow.
New home prices could potentially rise due to the implementation of Trump’s “tougher” immigration policies. Labor shortages could potentially worsen, and builders will have to spend more money to cover the cost of rising wages. This increase would be passed on to homebuyers through higher home prices.
“For those considering new construction in 2017, it’s worth considering the added cost that may come amidst ongoing construction labor shortages that could get worse if President-elect Trump follows through on his hard-line stances on immigration and immigrant labor,” said Zillow chief economist Dr. Svenja Gudell in a release.
Gudell reaffirmed that a shortage of construction workers as a result of Trump’s policies may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices.
Although renters should find some relief in 2017 as incomes increase and the rate of rental price growth slows.
Looking into 2017, Zillow predicts more cities will focus on “denser” development of smaller homes that are closer to both public transportation and urban centers.
In addition, the number of people who will drive to work is expected to see its first increase in nearly a decade, as homeowners move further into the suburbs in search of more affordable housing, and away from available public transportation options.
The country’s historically low homeownership rate is expected to be driven up in part by more Millennials buying homes in 2017. Millennials are more “racially diverse,” so the changing demographic of America will be reflected in homeownership, says Zillow.
In 2016, nearly half of all homebuyers were first-time buyers, and Millennials comprised half of the total number of first-time buyers.
Home values are expected to grow 3.6 percent next year, according to the more than 100 economic and housing experts surveyed by Zillow. So far in 2016, national home values have increased 4.8 percent.
Click here to read the entire Zillow forecast.