So 2016 is finally over and we’re on to a new year. What’s in store for the real estate industry in 2017? Many of the trends picking up speed last year will continue, such as tight inventory and “urban villages.”
Here are some of the factors and trends that will affect the real estate industry in 2017.
First let’s take a look at the National Association of REALTORS® forecasts. Economic indicators point to a slowing market in 2017:
- 9% increase in home prices
- 9% increase in the sale of existing homes
- 3% increase in new home starts
- 5% interest rates
- 11% decrease in inventory in major metro areas
Hot Western Markets
But Western metro markets will likely see higher price and sales increases than the rest of the country. Among NAR’s top housing markets for 2017 are Tucson, Portland, and Los Angeles. This is likely due to strong growth in jobs, consumer confidence, households, and population. These areas also have lots of millennials and baby boomers, affordable rents, and low unemployment.
NAR and Redfin predict 2017 will be record-breaking fast. For example, last year the average home spent only 56 days on the market. And same-day house tour requests have been rising. The Internet is having a big impact on the process. Sellers can easily get their own comparative market analyses online, and buyers have already gotten pre-approved, done research, and viewed listings on their smart phones before even speaking to a real estate agent.
This growing trend blends the best of urban and suburban into a new way to live. Residents can live, work, and play in the same area. These neighborhoods will be inclusive and available to a variety of demographics. Many people can’t afford to live in urban centers within walking distance of trendy restaurants, music ventures, and shops. And while suburban neighborhoods lack these hot spots, they do have good schools, clean parks, and low crime. So why not get both?
Millennials are Buying
Many millennials will buy their first house, and not just a starter home or economical condo. With growing wages, they may have the money to buy more. In 2016, 37% said they can save enough for a down payment, according to the National Association of REALTORS®. Millennials will be dominating Midwestern markets in particular due partly to strong affordability.
In 2016, the median square footage of new homes decreased for the first time in several years, according to the National Association of Home Builders (NAHB). Increased demand for city living, focus on entry-level buyers, and the tiny home trend are possible causes.
Green and Smart
Many of the trends on the horizon emphasize sustainability and smart features. Look for green building materials, more solar panels, low-impact designs, water-saving measures, and self-sufficient homes. High tech features like thumbprint-operated security systems and refrigerator cameras will put more control into homeowners’ hands.