The New Year is here, and with it comes a fresh start and positive energy to an uncertain year ahead. Before realtors can focus on 2017, it requires looking back and learning the lessons 2016 taught us. Apply those lessons to 2017’s predictions.
Lessons from 2016
The past year has become a seller’s market. Low inventory forces buyers to conform to the seller’s demands in exchange for the dream home. Luckily, enough buyers were willing to meet demand, hence increased sales. It helps that mortgage rates were low. Eligible buyers were able to secure a low rate that is affordable without missing payments. Those same people had the advantage necessary to compete with buyers to attract the seller’s attention. Cash purchases also had an advantage in the real estate market. Examining the market by state, real estate has been an uneven year, with certain states seeing more growth than others do.
Meanwhile, renters who cannot afford to purchase a home will continue to rent until money is available. It’s true for new residents moving to a new city. Unfortunately, the rental market soared in price. Renters who cannot afford to pay high costs will search for affordable housing. Consequently, affordable housing is in unfavorable and seedy neighborhoods, and the best neighborhoods are the most expensive.
Expect 2017 to continue the upswing. However, the revenue speed won’t go as fast as 2016. It will slow down a bit due to the economy and uneven growth. The uneven growth will encourage buyers to seek mid-size cities for living. These cities contain home and neighborhood amenities without the big city attraction. Additionally, the housing market is inexpensive compared to the large city counterparts. Mid-size city examples are Raleigh NC, Fort Collins CO, Irvine CA, Plano TX, Fort Wayne IN, Murfreesboro TN, Lincoln NE, and Overland Park KS. This strategy is great for millennials.
Consequently, large cities will feel the pinch. Buyers who flock to large cities receive the most opportunity in jobs, but real estate market prices increased and inventory decreased. It will continue in 2017. Foreign buyers and investors are partly responsible for the increase, and sadly, the foreigners aren’t decreasing. Therefore, the sellers have the advantage. Luckily, builders will keep building homes in the New Year, despite not building fast enough for buyers’ taste.
In the mortgage department, the booming mortgage rates decrease from last year is ending. It will slowly climb higher this year, yet the percentage remains affordable compared to five years ago. The upside is lax lender and government restrictions. This means more buyers have an opportunity to secure a mortgage.
Meanwhile, the rental market, unfortunately, won’t change this year in price. Forty-four million Americans rented last year, according to Forbes, and it will increase. Renting is a lucrative deal for investors to try, and more renters equal more opportunity to woo renters into your space. The market favors the property owner/investor due to increased renters and less rental property available.
Realtors cannot move forward until they reflect on the past year. With a new administration on the horizon, the New Year tells us nothing will change in real estate. Yet, realtors and industry leaders remain optimistic for a change.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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