Well here we are on the doorsteps of 2017. The past year certainly flew by and was full of surprises and included one of the busiest housing markets we’ve ever seen. Here are several well researched and thought out predictions for the housing market going into 2017, and sprinkled throughout are also a few more “Humorous” predictions that span from Fake News Stories, The Seahawks and even to Marvel Entertainment… We hope you enjoy!
- The housing market will continue to boom in 2017, though prices will increase at a slower pace.Strong buyer interest, better access to credit and a modest increase in the number of homes for sale will allow home sales to grow. Home price growth will continue to go up but not as quickly as it did in 2016. Homes will sell even faster next year, breaking this year’s record as the fastest real estate market.
The top markets for price appreciation likely will be in Seattle, Wash.; Portland, Ore.; Denver, Colo.; and Boston, predicts Eric Fox, vice president of statistical and economic modeling at VeroForecast. These markets’ robust economies have growing populations but a tight supply of homes for sale on the market that will likely lead to some of the largest price increases across the country.
- 2017 will be the fastest real estate market on record. We expect 2017 to break the 2016 record as the fastest market on record, measured by the average number of days homes spend on the market before going under contract. Demand for short-notice tours has only increased. Five years ago, one in three requests were for same-day tours; today it is two in three. Same-day tours grew 27 percent so far in 2016 compared to the same period last year.
Housing market forecasts for 2017 suggest that Seattle, Portland and other real estate markets in the Pacific Northwest will continue to outpace the nation in 2017, in terms of home-price appreciation. This housing market forecast is based on solid evidence. After all, the Seattle and Portland metro areas saw double-digit price growth during 2016, and the supply-and-demand situation that caused this hasn’t changed significantly. So these markets will probably see bigger home-price gains in 2017 than most other metros and also more bidding wars.
3. Marvel at Marvel. The world will be saddened upon learning of the passing of Stan Lee, and even more saddened after learning he actually passed in 1994 and that an 83-year-old Iowa man has been sitting in as a proxy for 20 years, forced by his temp agency to listen to a million people intently discuss topics he has never had interest in. Turns out, he’s also who signed off on Thor: The Dark World.
4. New-construction growth will slow. Home builders likely will continue to be more subdued, despite calls for more inventory.“Home builders behavior likely is a continuing echo of their experience during the crash,” Pantheon Macro Chief Economist Ian Shepherdson told MarketWatch. “No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resistance.” Unfortunately, this affects the availability of affordable starter homes the most, which means higher prices for first-time buyers.
5. Mortgage rates will increase, but not too much. At The Cascade Team we have talked to our lending partners and expect mortgage interest rates to increase, but to no higher than 4.3 percent on the 30-year fixed rate. Already, the 30-year fixed mortgage rate has increased from 3.5 percent at the end of October to just above 4 percent following the election. The recent rise in rates is largely attributed to Wall Street optimism regarding Trump’s proposals for increased infrastructure spending and tax cuts. In short, Wall Street is now anticipating higher economic growth and inflation in 2017, and reshuffling to stocks from bonds. In general, when investors buy fewer bonds, bond prices fall (yield rises) which pushes up mortgage rates. Rates are still very low relative to historical averages and expected to remain lower than in 2015 when the 30-year fixed rate was 4.5 percent.
6. Facebook’s fake “Fake News” problem will get even hokier. Saying there’s fake news on Facebook is like saying there’s water in the ocean. Considering that most online content is actually commentary, sensational clickbait, the rants of a self-proclaimed expert or some form of user-generated gibberish, Facebook’s fake news problem is, ironically, fake news. And the fun is just getting started.
7. More people will have access to home loans. Starting in 2017, the government-sponsored mortgage giants Fannie and Freddie will back bigger mortgages for the first time since 2006. The loan limits insured by these companies will increase to $424,100 from $417,000 in most regions of the U.S. In expensive housing markets, the allowable loan size increases from $636,150 from $625,500. This change makes it easier for more homebuyers to qualify for a mortgage in high-priced markets.
Additionally, as the Federal Housing Administration (FHA) has achieved sounder financial footing, there is an increased likelihood that the White House will further lower FHA fees. These fees make it more costly for first-time buyers to purchase homes. In addition to a mortgage rate, FHA borrowers pay a one-time upfront fee of 1.75 percent of the mortgage balance and annual premiums of 0.85 percent. In 2015, the Obama administration lowered annual premiums from 1.35 percent, but these fees are still higher than the 0.60 percent rate in 2011. The upfront FHA fee hasn’t budged in five years, and is much higher than the 1 percent rate it was in 2011.
Finally, in 2016 large financial institutions such as Bank of America, JPMorgan, Wells Fargo and Quicken all introduced mortgages requiring as little as 1 percent to 3 percent down. We expect increases in the availability of low down payment mortgages to draw more millennial buyers into the housing market.
8. And it’s good! Seattle Seahawk Steven Hauschka actually makes a field goal attempt while playing against the Arizona Cardinals…. (This may be the biggest long shot prediction of the bunch!)
9. Millennials will move to second-tier cities. In the final stretch of the 2016 housing market there have been more first-time buyers entering the market, particularly millennials aged 28-31. However, they’re not into fixer-uppers. Forty-one percent of first-time buyers surveyed chose design quality, floor plan and finishing touches as the top features they look for in a home, surpassing other factors like green space (34 percent), length of commute (32 percent) and property taxes (15 percent). In order to get the high-end finishes and design styles they want, they’ll have to buy in more affordable cities like Raleigh, North Carolina, Austin, Texas, and North Port, Florida, which lead the country in the number of new residential building permits per 1,000 people.
10. Bonus Prediction to set your mind at ease: Amazon’s Alexa will not become aware, take over the world and kill all the humans, Terminator style. So you can relax and have a wonderful 2017.
With The Cascade Team you never walk into any transaction alone. You always have a Team behind you!
Contact us at info@TheCascadeTeam.com or 1-800-509- 6905 to set up your appointment to learn more.