5 Housing Market Predictions for 2017
The housing market in 2016 was largely defined by two main trends: rising home prices nationwide and falling interest rates due to political events such as the Brexit vote and the U.S. presidential election. And while certain features of the housing market this year are expected to remain the same in 2017, such as the popularity of Western metropolitan areas, others are expected to change. From the rising influence of millennials to shifting trends in home prices and housing inventory, here's a look at the top housing market trends for 2017, according to Joe Kirchner, senior economist at Realtor.com.
These two generations are expected to dominate demand in the housing market for the next decade, with millennials comprising 33% of the buyer pool and baby boomers making up another 30%.
Cities across the Midwest, such as Minneapolis, Des Moines, Iowa, and Omaha, Neb., likely will continue to draw more millennials than the rest of the country. In 2016, millennial market share in these cities' housing markets was 42%, versus the national average of 38%. Because affordability should remain strong across the Midwest, higher interest rates in 2017 could fuel this trend.
Home price growth is expected to shrink to 3.9% year over year in 2017, from an estimated 4.9% this year. Only 26 of the top 100 metropolitan areas are expected to experience home price growth in excess of 1%, while in 46 of the markets home price appreciation should slow down 1% or more.
The number of homes on the market will continue to dwindle, since the conditions causing the current inventory constraints are not expected to let up. In the top 100 metropolitan areas nationwide, homes stay on the market a median of 68 days, which is 14% faster than the rest of the country, according to the site.
While gains will be made elsewhere in the country, the West is still expected to outpace the rest of the country in terms of home prices and sales. Realtor.com predicts that home prices in Western cities will increase 5.8%, and sales are expected to tick up 4.7%.