Hail to Tepid Optimism
There is possibly no better day to look forward than Inauguration Day. With trepidation. With hope. With a sense of relief or a sense of doom. It’s one of those days that’s all about the future.
Following the wreckage of the 2016 presidential campaign, 2017 seemingly has taken those usual feelings and multiplied them by a factor of 10. While many experts are bullish on the Trump administration’s effects on the stock market, the housing market is a different beast with many different variables.
But obviously none of these prospects are entirely about Donald Trump or even anyone in Washington. So in the spirit of Inauguration Day, we scoured some expert sources for some predictions on what 2017 has in store for those of us who make a living because of the housing market.
1. All things in moderation
There are few business sources more reliable than Forbes, and in their most recent 2017 outlook article they predict a whole heaping helping of moderation. Credit may become more readily available… possibly. Supply will improve… but not enough to overcome most shortages. More Millennials will buy… and also rent. You get the picture.
There are a few bolder statements. Competition in an already competitive seller’s market will only get more fierce, with an expected lowering of the 52-day average-time-on-market. Also: Homes will actually become less affordable.
From the article:
Wages are expected to grow in America’s big cities this year, but the share of homes affordable to someone earning the median income is not. This trend, which has stymied many aspiring to buy their first home over the past few years, will be intensified by a continued shortage in low- to moderate-priced inventory and rising mortgage rates.
2. Optimism reigns
The real estate experts at Inman have one of the rosier outlooks on 2017. Their Special Report is predicated on industry surveys, which show some pretty interesting numbers: 27.43 percent are “extremely optimistic” about 2017. Fifty percent think unit sales will increase in 2017 and 75 percent believe prices will increase. And 52.21 percent think a President Trump will be good for the housing market. So there you go.
Read the whole (lengthy!) Inman article here.
3. Housing as catalyst
Fortune Magazine describes the housing market as the “rocket fuel” for an economy that may well take off. One of the more interesting elements of their optimism is the growth of mid-sized cities (they specifically cite Raleigh, N.C. and Fort Collins, Col., as examples), where building permits continue to soar.
Read the Fortune article here.
4. Rates are going to rise
In a move long-foreseen by watchers of the Fed – and already started by the Fed itself – interest rates are poised to rise fairly significantly over the next year. The result, according to the Washington Post: A possibly constricting credit market and a focus by many buyers – especially Millennials – on more affordable locations in the suburbs and Midwest.
Read the entire Post article here.
5. Rising prices, lower sales (in moderation)
Kiplinger’s takes a look at some of the more in-depth statistics, including housing starts and home sales, to paint a mixed picture of 2017. While an increase in prices isn’t necessarily a bad thing, the accompanying drop in inventory and sales and a rise in mortgage rates will temper some optimism, even as the markets rebound from a sluggish November and December. Kiplinger’s also mentions as-yet-unclear Trump fiscal policy and its effect on markets:
Despite some recent declines, interest rates are still likely to head higher over the course of 2017. Rates jumped after the presidential election because of the prospects for higher deficits and higher inflation, spurred by Donald Trump’s tax and spending proposals. But considerable uncertainty exists over how much of the Trump program will be adopted, when it will be adopted, and how it will be paid for. However, it is highly likely that sometime this year, it will become clear to bond markets that both the deficit and inflation are headed higher, pushing rates higher as well.
Read the Kiplinger’s article here.
So, in the housing market as in the rest of American life, only one thing is certain: 2017 is going to be interesting to watch. We wish you much success!