2016 was a stellar year for homebuyers.
Low rates, high rent prices, and a litany of government-insured loan programs were the key ingredients of this winning recipe.
Now, 2017 is knocking on the door. Will the coming year be more of the same? Or will conditions fall out of favor for homebuyers?
Anticipating real estate market trends is no exact science, but there’s a general consensus among the experts: Change is on the way. And, chances are, it’s probably not the kind of change you’re expecting.
So, what housing market trends will likely surface in 2017?
A hot year for home sales
Each year, the National Association of Realtors (NAR) enters its prediction for home sales in the United States. In 2016, the NAR estimated a healthy 5.8 million existing homes would be purchased. As for 2017, that number is expected to climb as high as 6 million.
That’s big, but some forecasts are aiming even higher. Fannie Mae and Freddie Mac are estimating that number to reach 6.2 million in 2017.
Growing confidence in the market and prime buying conditions are two big contributors to this housing market prediction. But with so many looking to purchase, this anticipated demand could also stiffen the competition for buyers. So if you’re thinking about making your homeownership dream come true in 2017, come focused and come equipped.
First-time homebuyers are poised to come out in droves
One if by land and two if by sea: The first-time homebuyers are coming.
In 2016, first-timers made a big splash in the housing market by claiming 33% of home sales. Yet in 2017, experts predict that this splash could turn into a sea swell. First time homebuyers are slated to comprise 52% of home sales in the coming year. 61% of them will be millennials.
More and more people are beginning to realize that owning a home is financially possible. And while millennials are expected to make up a huge portion of buyers, 37% of them are still concerned about saving enough for a down payment. It’s a worry that many are dispelling by choosing a low down payment mortgage like an FHA loan, and changing the way they think about saving.
Rates may increase (and it could actually work in buyers’ favor)
Homebuyers across the country enjoyed historically low interest rates in 2016. But they also dealt with another reality: quickly rising home prices.
National home prices increased 4.5% over 2016. On the cusp of a new year, experts are predicting that rates will begin to increase, which may actually help slow down the growing home prices. In fact, home prices are projected to rise a full point slower at 3.5%, according to Moody Analytics.
From an affordability standpoint, this could be great news for buyers. A rising mortgage interest rate trend won’t necessarily spell doom for prospective homebuyers, and 2017 could remain an excellent year to purchase a home.
Growing families may be (especially) in luck
Over the past five years, larger, 4-bedroom homes have risen the fastest in inventory and climbed the slowest in price. So if you’re looking to purchase a larger home, 2017 might be the time to pull the trigger.
What if you’re looking for a smaller home? All is certainly not lost. Buyers in the market for 1, 2 or sometimes 3-bedroom homes may have to be a bit more flexible in the hunt. However, ripe market conditions may still help make 2017 one of the best years in recent memory to buy a home.
Ready to get the process started? ditech can help every step of the way. Find your Home Loan Specialist or call 1-800-700-9212 today.