While a fair number of unknowns loom ahead for the US in 2017 as new leadership transitions in, many real estate experts are predicting next year will be a good one for the industry. In fact, according to new predictions by online brokerage Redfin, 2017 could be the fastest year for real estate on record.
In 2016, the “typical” US home was on the market for 52 days — the shortest amount since 2009. However, Redfin is anticipating homes to sell even faster in the coming year in part due to emerging technologies that will speed up real estate transactions, as well as increased demand for “short-notice” home tours. The combination of these two factors have the potential to make next year’s real market the fastest ever seen, says Redfin.
And while the home sales and prices are expected to grow next year, they will do so at a slower pace than 2016’s market. This is in large part due to affordability issues. The amount of homes in the country’s largest cities that are affordable to homebuyers earning the median annual salary has continued to decline in recent years, and will continue to fall in 2017.
However, despite affordability issues, Redfin predicts median home prices will increase 5.3 percent from last year, on par with 2016’s year-over-year increase of 5.5 percent. Inventory is expected to increase 1.7 percent year-over-year, after dropping an estimated 3.4 percent this year.
As BuzzBuzzNews reported previously, questions about how President-elect Donald Trump’s immigration policies will affect construction labor still stand. With that in mind, coupled with a pre-existing labor shortage, Redfin anticipates a slowdown in new construction growth in the coming year.
On the financial front, national mortgage rates are expected to increase no higher than 4.3 percent in 2017. “Wall Street’s optimism for economic growth and inflation in 2017 is expected to keep mortgage rates low,” says Redfin.
And with Fannie Mae and Freddie Mac increasing the size of loans they will back, along with new mortgages requiring as little as 1 to 3 percent down payment, more Americans could have access to home loans in 2017 compared to this year.
Interesting to note, is that the Trump administration’s plans to privatize Fannie Mae and Freddie Mac won’t take place until “at least 2018.”
Markets that can offer homebuyers new construction at affordable prices will see an influx of new residents. Many first-time homebuyers, most notably Millennials, have been priced out of starter homes in larger, more expensive markets like New York City and San Francisco, while metros like Austin, TX and North Port, FL are expected to lead the trend of offering more affordable new construction homes.
“Baby boomers will become less economically relevant as millennials continue to come of home-buying age. Superstar cities will create much of the job growth, pushing wages in those cities up. Yet the percentage of homes in America’s largest cities that are affordable on the median income has declined the past two years and will continue to fall in 2017,” said Redfin chief economist Nela Richardson in the release.
Richardson also noted that sales could be even stronger if Millennials had access to more starter homes on the market.
“We expect to see more homes built in second-tier cities and more Millennial homebuyers moving from the coasts to smaller and inland markets where they can find affordable starter homes.”
Click here to read the entire report.