Enjoy that extra glass of bubbly and savor those last few holiday parties because it's going to be a bumpy ride come 2017. Inman, a leading resource for real estate news, recently asked eight experts to share what factors will impact the housing market in 2017. With a focus on mortgage rates, affordability, inventory and more, the article offers insights on what to expect in the year ahead - and it's a doozy.
Key Takeaways:
When it comes to inventory or lack thereof - much like what we've seen in Dallas, Fort Worth and Denver in recent years - experts believe it will continue to be a problem in 2017. Many contributing factors include lack of entry level housing for sale, shortage of move-up buyers, increasing mortgage rates, and current sellers unwilling to take risks or budge on price. “How do we address the fact that the existing homeowner, the largest single source of housing supply, has a built-in financial disincentive to make that supply move?” asked Mark Fleming, chief economist at First American. “You’re making that decision to supply as a function of what you can afford to buy, but all else held equal, because you lose that low rate and have to get a new mortgage at a higher rate, you might not be able to buy your own home back from yourself without an increased monthly payment.” In addition, the biggest pool of potential homebuyers - millennials - didn’t make huge strides toward homeownership in 2016. “Our surveys of the prime first-time homebuying age people suggests a very high, 90 percent-plus, want to eventually own a home,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “What has tended to be the case is that they’re saying ‘just not right now,’ and that’s driven by the fact that their incomes haven’t risen as far as they need to and they’ve delayed getting married and having a baby relative to prior groups at this age point.” This could change in early 2017 as homebuyers feel a sense of urgency to jump on the current low mortgage rates before they spike further. There is also potential for a reduction in regulation which will make it easier for lenders to get more creative. Rodney Ramcharan, director of research at University of Southern California’s Lusk for Real Estate addresses the luxury market saying, “I see prices at the median perhaps not growing as fast but prices at the top end are likely to boom. If a Trump Presidency entails greater inflation or risk, high-end homes are a great hedge against inflation and risk, so for people at the top end, I see that there’s a natural tendency now to shift the wealth away from equity markets into high-end homes.” For market conditions and wild card factors with the potential to shake things up in 2017 read Inman's article here. Cheers, AP
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