If you’re a real estate professional who’s felt like “hold your breath” and “keep your fingers crossed” have been reasonably useful business strategies for the last few years, we have great news: you can finally exhale. 2017 brings plenty of reasons to be optimistic. Here are 8 Real Estate trends that have us looking up:
Real Estate Trend #1: Interest Rates and Mortgage Rates Are Going Up—But Not Significantly
All indicators suggest 2017 is going to be the year of “up.” The Federal Reserve will likely follow their December 2016 interest rate hike with three additional bumps this year. While that will cause mortgage rates to go up, we’ll still be well-below historical averages—somewhere in the mid-4s.
Real Estate Trend #2: Credit Availability May Improve
Will increased mortgage rates cause homebuyers to adjust their purchase budgets? Possibly. But there’s another potentially upward trend that could balance those rates: the amount of available mortgage credit. Experts are keeping a close eye on how President Trump and his team deal with the Dodd-Frank Act, and many are optimistic about relaxed lending practices and a break in fees for first-time buyers.
Real Estate Trend #3: Home Values Will Appreciate
Home values will continue to appreciate in 2017, although a bit slower than last year. Compared to 2016’s 5.5% increase in year-over-year home prices for existing homes, we’ll see increases hovering near 4%.
Real Estate Trend #4: Supply Will Improve—If Only Slightly
In addition to increased home values this year, we’ll see increased home volume. Buyer demand is high, and with the turnaround in the economy overall, builders are ramping up their projects. Still, supply won’t quite match demand, and 2017 will continue to belong to sellers.
Real Estate Trend #5: Suburbs Will Continue to Grow in Popularity
Last year’s trend toward suburbs and mid-size cities will continue to rise in 2017—mostly because they’re affordable. But what’s happened to all the previous interest in urban/mixed-use neighborhoods? What about that whole “walkability” thing we’ve been told is so important? Read on.
Real Estate Trend #6: “Surban” Environments
The demand for live/work/play neighborhoods is still there, but it’s moved outside the urban context. And there’s a name for it: surban. These best-of-both-worlds environments combine the perks of the suburbs, such as great schools and affordable housing, with the amenities of cities, like walkable stores and entertainment venues.
Real Estate Trend #7: Millennials Are Signing Up for Mortgages
Experts agree that 2017 will be the year Millennials take their next step in adulting: home ownership. In fact, the majority of home purchases this year will be made by first-timers home buyers—most of whom will be under age 35. These young adults will be looking for affordable homes in the suburbs, and while homebuilders are dusting off their equipment, they probably won’t be focusing their efforts on starter homes. That means most Millennials will have to choose from existing options. Again: Sellers will have the upper hand this year.
Here’s an important note, though: Don’t make assumptions about Millennial clients’ needs and wants. A decent percent of young adults have diligently saved money while simultaneously paying down their student debt. As a result, they may be in a position to enter the market at a more-than-starter level.
Real Estate Trend #8: Boomers are on the Move
In addition to Millennials entering the market, we’ll see a boost in home sales to Boomers. As older adults approach retirement age and because their current home values have finally rebounded, they’re ready to move on. Some will look to downsize and simplify, but many will be expanding. They have the financial freedom to do so, after all, and they really, really want their grandkids to come visit. In an interesting plot twist, it appears Boomers and Millennials will be swapping locations. While their kids are moving out to the ‘burbs, mom and dad will be taking their place in the city.
Let’s recap: This year, interest rates will go up, as will mortgage rates—but so may credit availability. Meanwhile, home values and volume will rise, and both Boomers and Millennials are ready to get a move on. As real estate professionals, 2017’s on our side.
Interested in joining the Vegas One Realty team? Let’s talk!