January Market Report – The 2017 Forecast
As we kick off 2017 there are many economic forecasts being shared about what to expect from the real estate market. Last year was complete with tight inventory levels that were coupled with historically low interest rates. However, as the year wrapped up we saw rates showing slight increases after the presidential election. So what can we expect for this year?
The National Association of Realtors has released a Housing Opportunities and Market Experience survey which polled respondents about their confidence in the economy. The outcome was that the majority of households felt that now was still a good time to buy a home. Only among those who were renting was there a slight decrease in confidence.
Lawrence Yun, NAR chief economist says the declining confidence among renters is due to price increases in some areas of the country. “Rents and home prices outpacing incomes and scant supply in the affordable price range has been a prominent headwind for many prospective buyers this year,” he said.
Despite this decrease in enthusiasm, sales are predicted to be 3.3% higher than 2015 after all 2016 numbers complete. Furthermore, 2017 is anticipated to have sales climb by approximately 2% more. By the end of the year 2017 we expect that mortgage rates will end up around 4.6% which will potentially slow the market down to more of a normal rate.
“Although the economy is expected to continue to expand with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth,” said Yun.
The survey found that job growth and lower unemployment has been contributing to a stronger confidence in the economy. In fact, consumer confidence had increased by 6% from Q3 to Q4 of 2016. The most positive segment are those under the age of 44 and living in an urban area with higher incomes.
Meanwhile, nearly two-thirds feel it is a good time to sell with almost all respondents at 91% believing that prices will remain the same or rise in their area over the next six months. Overall the findings of the survey show that most are optimistic about the future of the real estate market and our economy as a whole.