The first quarter of 2016 saw an increase in residential real estate activity, home construction and housing services. Together, these three make up one-fifth of the total overall output in the US economy of 2016, according to fortune.com. It’s easy to see why real estate is so important in any nation’s economy. Historically, housing has always powered the US economy out of recession. So, it’s obvious to see why careless mortgage practices could trigger the great recession of 2008.
That established, what can we expect for 2017’s housing market? Based on various sources, Zillow.com and bankrate.com, we can expect to see the following real estate trends in 2017:
- Rise in mortgage rates.
Mortgage rates shot up by December to above 4 percent. This was bound to happen after the election as experts predicted. The Mortgage Bankers Association predicts this will be the case for the first three months of 2017. Matthew Carbray of Ridgeline Financials believes that even though mortgage rates are ‘seemingly’ high, they are still low compared to future expectations. Early 2017 might just be the best time to buy a home.
- Millenial activity.
Based on past trends, millenials have finally enetered the real estate market. 2016 stats from NAR show that 61% of home buyers were under 35 years. The millenial home buyer is not like buyers in other age groups as he prefers new and multifunctional to spacious. More homes will be constructed with the millenial home buyer in mind.
- Rental affordability will improve.
This is reinforced by the Urban Land Institute’s Oct 2016 Real Estate Consensus Forecast, which mentioned that apartment rental rate increase is likely to moderate within the next 3 years to 3.5 percent in 2016, 3.0 percent in 2017, and 2.9 percent in 2018, but stay above the 20-year average growth rate of 2.8 percent.
“Tenants should have an easier time in 2017. Revenue growth and slowing rental appreciation will combine to make rent more affordable than it has been for the last two years,” said the chief economist of Zillow, Dr. Svenja Gudell.