With a new year just around the corner, many homebuyers are keen on discovering what emerging trends in real estate, 2017 specifically, will shape their property purchases.
While many experts agree that 2017 market trends point toward a strong year in terms of home sales, there are many regional, governmental and demographic factors which can affect your ability to find the home (and property price) of your dreams. And while we don’t have a crystal ball — no one knows exactly what the next year will look like in terms of real estate — here are four emerging trends in real estate in 2017 to keep your eye on, and to make part of your overall home buying strategy.
What Are The Emerging Trends In Real Estate For 2017?
1. Rising Mortgage Rates
Regardless of who was going to be the new president in 2017, mortgage rates were bound to rise at some point. What some didn’t predict was how quickly that rise would occur. In fact, mortgage rates — which hovered around the 3.5 percent mark — rose soon after election day, and as we write this article rates sit at about 4.13 percent (with all indications being that rates will continue to rise in 2017).
So, what does this mean for homebuyers?
Well, as with most things in the world of finance, there’s bad news and good news. The bad: the monthly cost of owning a home has increased for those that go through traditional lenders.
As Black Knight Financial Services, a mortgage and real estate technology and data provider revealed to the Wall Street Journal, the “latest bump in rates boost the cost of owning the typical U.S. home by more than $70 a month, or about $26,000 over the life of a 30-year fixed mortgage.”
Sounds dire for homeowners, doesn’t it? The same amount of money doesn’t buy quite what it did months, if not weeks, ago. Well, not exactly.
Rising mortgage rates typically have a bigger impact on suppressing housing demand, rather than outright excluding eligible buyers. Rate increases like this tend to, as David Berson, chief economist at Nationwide Insurance told the Wall Street Journal, “creates a disincentive for homeowners to move to a new city in pursuit of a new job if it means their mortgage might be more expensive.”
Key Takeaway: Rising rates mean loans are more expensive, but it also means demand will be lower, and the chances of you finding that “perfect” home might be better than you realize.
2. Enter Millennials, Stage Right
Here they come.
That’s right, the often disparaged — and often misunderstood — millennial generation (individuals born between 1982 and 2000) will burst onto the home buying scene in 2017 and represent one of the biggest shifts in home buying trends in years.
According to a Realtor.com survey of home shoppers, 52% of all home buyers in 2017 will be of the first-time variety. (And nearly 62% of those will be under the age of 35.)
What does this mean for the would-be home buyer in 2017. Well, as Jonathan Smoke, chief economist of Realtor.com explained, “Competition will be even fiercer next year for affordable starter homes in the suburbs.”
To avoid possible bidding wars (and avoid paying a high premium for the property you want) you may want to look at purchasing a winter home (sometime in January or February) to get a possible jump on the inevitable spring home buying spree.
Another option might be to look at something “beyond” the usual first-time buyer home — whether in terms of floor plan or sheer square foot. You could also look for something closer to an urban center — if everyone is looking for suburban homes you may do well to “swim upstream” — or perhaps just outside the suburbs.
This doesn’t mean an affordable starter home will be impossible to acquire in 2017. It just means you may need to be patient — and move faster than a millennial — to make the deal happen.
Key Takeaway: Millennials en masse will be looking for their “starter home” in 2017. Buy in the winter, or look outside the usual suburban box, to find a good deal.
3. The West Will (Continue) to Be the Best
Though home prices, nationally, are set to grow at a slower price in 2017 then they did in 2016 — up 3.9% in 2016 vs. 4.9% in 2017 — this does not apply when it comes to the west coast, where home prices in western metro areas are expected to jump 5.8% in 2017.
As Realtor.com laid out in their forecast for the top 2017 housing markets, Western metro areas dominated the top-10 markets on the list. (Phoenix, Los Angeles, Riverside, and Sacramento represented four of the top five markets on the list.)
This should come as no surprise to any home buyer looking for a property in those areas. Relatively low unemployment, strong local economies, and large populations of millennials & baby boomers — along with low demand — can lead to premium prices for property on the West Coast.
Does this mean you shouldn’t try to buy a home on the west coast in 2017? Absolutely not. It just means using the overall emerging trends in real estate for 2017 to your advantage. With a large influx of millennial first-time home buyers entering the market in 2017 also comes an increased likelihood that some of your home buying competition may have trouble with a large down payment, or may have a less-than stellar (or incomplete) credit history.
By ensuring all your home buying ducks are in a row, you can possibly snag that valuable ever-elusive Western metro property. (Which, barring a huge reversal in real estate market trends, will continue to grow as a financial asset.)
“The More Things Change…”
As anybody who remembers the real estate bubble of the late 2000s remembers, there are no guarantees in real estate. (No matter what the gurus and experts say.)
But by having your finger on the pulse of emerging trends in real estate for 2017 — and by making yourself as organized and attractive a homebuyer as you can — you’ll be better equipped to face what comes your way in your home buying quest. (Even if that means dealing with a hipster Millennial or two.)