In the News – 4 trends that will shape the housing market in 2017
The industry had been gearing up for first-time buyers to flood the market in 2017, but the landscape is changing. A jump in mortgage rates following the election is pricing some of those would-be buyers out, signaling that activity will likely slow in the coming year. That’s according to Realtor.com’s 2017 Housing Forecast, which also predicts a damper on price appreciation and a stabilization in the national homeownership rate.
“Because of demographics and affordability challenges that are starting to emerge, more people are focused on getting into homeownership because renting is continuing to have the same challenges and, over the long term, is something that can really impact a household’s financial situation,” said Realtor.com Chief Economist Jonathan Smoke.
Below, we recap the key takeaways from this year’s report.
The largest and second-largest demographics, respectively, millennials and baby boomers, will dominate the market in 2017 as the living situations of both groups are in flux. Millennials are expected to account for 33% of homebuyers for the year and baby boomers 30%.
Many millennials are purchasing homes for the first time, meaning the post-election surge in mortgage interest rates by roughly 40 basis points presents the biggest hurdle for that price-sensitive group, according to Smoke, and could prevent their share of sales from reaching prerecession levels for the next several years. The dramatic rate shift had more than double the impact of a move by the Federal Reserve to raise rates, he said, and some industry observers expect the market to move back on such a strong reaction to inflation expectations, opening up a window where credit for homes becomes easier to access.
Other challenges include tight inventory conditions nationwide and high prices. Meanwhile, boomers are taking advantage of elevated home values to sell their properties and downsize, opening more existing inventory to potential first-time buyers.
Get more information straight from the source Construction Drive