I struggle with how to report housing predictions because (since real estate markets can be very location driven) offering one prediction in real estate is like saying the average temperature in the United States tomorrow will by 30 degrees. I'm not sure you would find that very helpful considering it may be 50 degrees in Atlanta and -10 degrees in Winona, Minnesota. In this article I have outlined National Predictions as well as Local Market Conditions.
My research in writing this article involves reading national real estate trend reports, analyzing current local area market stats, gathering the opinions of other agents, lenders and closing attorneys and some of my own intuition.
1) Overall Opinion
The first quarter of 2017 should be strong for the real estate market as buyers and sellers make a move now that the election is over and they hustle to purchase before mortgage rates increase any more. Overall, experts are predicting a slowing, yet moderate growth for the national housing market with a change in the demographic composition of who is buying homes and post-election market changes.
President Trump has expressed his support toward the real estate industry which may result in a trend in government deregulation. Loosening regulation on lending could potentially boost homeownership by making it easier for consumers to obtain loans.
Deregulating the construction industry could mean more affordable homes. However, the labor shortage in the construction industry could play against that pushing prices higher on new construction.
3) Millennial Buyers Entering the Market
Millennial buyers will be coming into the main home buying years. The latest study on consumer housing trends from Zillow finds that about half of home buyers are under the age of 36. First time home buyers make up 52% of prospective buyers planning to purchase homes in 2017. Another interesting finding is that that millennials have "skipped-over" the more traditional starter home, they waited a little longer and are looking at larger and more expensive homes.
4) Increase in Homes Sales
The Inman respondents and the chief economist surveyed were united in their belief that the number of homes sold in 2017 will increase over last year. They are especially optimistic about sales in the first quarter since the election is over and consumers are wanting to buy before mortgage rates increase (and impact affordability).
In Atlanta, the number of homes sold was up 7.7% in 2016 vs 2015. As is standard in this area, the summer and fall quarters experienced the greatest number of sales. Atlanta's economy is strong and experts are predicting increasing home sales.
5) Inventory Shortages
Overall in the United States there is a shortage of homes available on the market. The following chart shows the number of homes available for sale from April 2008 to November 2016.
The lack of inventory is especially evident in the downtown Atlanta area and North Atlanta suburbs where inventory shortages have resulted in price appreciation of 10% or more in certain areas. The Northwest Suburbs of Atlanta (Cobb, Paulding, Cherokee Counties) have experienced inventory shortages, although not as pronounced as downtown. Most of the inventory shortages are in mid to lower price ranges under $350,000.
The following chart shows the number of homes on the market compared to the number of homes sold. Over the last two years, during the summer months there was essentially the same number of homes on the market as the number of sold. This is a considerable improvement over the last 5 years.
Multiple offers is a consequence of low inventory. It was not uncommon in 2016 (nor will it be uncommon this year) for there to be 2 to 20 offers on lower priced homes. This can be very frustrating for buyers as they "lose out" on home after home.
Now, more than ever, it is important that buyers work with agents experienced in handling multiple offer situations. At Live Love Atlanta we study techniques and use these negotiation strategies to increase our client's chances of winning the offer.
"I'm advising for all my buyer clients to be pre-approved by a lender so they are ABSOLUTELY ready to make their BEST offer on their favorite property." - Marie Jordan, REALTOR
7) Interest Rates
Most industry experts predict that as the economy continues to improve that interest rates on housing will creep up. Over the last 5 years rates have held at 4.5% or less. Just a few months ago they were 3.5%. According to a Kiplinger economic forecast, "By the end of 2017, expect the average 30-year fixed rate mortgage to rise to 4.6%, with 15-year fixed rates at 3.8%."
Realtor.com's 2017 Prediction mentioned that there is fear that due to mortgage rate increases over the last few weeks first timers will face new hurdles as they navigate the qualification and buying process.
8) Surban Living
You may have noticed a new trend moving away from suburban-style sprawl to more dense communities of different housing arrangements, such as town houses, apartments and single-family homes, together in the same neighborhoods. "Surban" living is becoming more and more popular. Downtown Marietta is the perfect example of a Surban lifestyle where there is a blend of urban and suburban living that provides the best of both worlds. It’s possible to walk to work, like in a city, as well as enjoying pedestrian access to groceries, entertainment and youth- and sport-friendly parks — plus reliably strong public schools.
What I have experienced over the last year or so is more and more of my clients are wanting to move closer to these Surban communities. This is evidenced by the popularity of communities such as Manget and Meeting Park near the Marietta Square.
“I love working with Millennials. I love their excitement and energy! The great thing about our office is that we offer the latest use of technology that really speaks to them." - Rebecca Singer, REALTOR
9) Price Appreciation
Nationally, home prices are forecast to slow to a 3.9% growth from an estimated 4.9% in 2016.
"Real estate continues to be one of the best long term investments to watch your money grow. Why rent with zero equity accumulation?" - Stacy Bradshaw, REALTOR
"My husband and I were looking at new construction about 3 years ago in Cobb/Paulding County and could've gotten new construction with all the upgrades for about $185,00 and now it's at least $200,000 and up!" - Amanda Kersey, REALTOR
The 2017 housing market will be a year of slowing, yet moderate growth, set against the ba...
The pace of U.S. home price appreciation is expected to slow somewhat in November, accordi...