2017 Real Estate Trends Investors Should Know About
It is 2017, and real estate is once again on the rise. The housing bubble of 2008 certainly provided the largest blow to the economy since the Great Depression, but job growth, increased wages, and the increased availability of credit has created a boost in the housing market. Whether you are a real estate agent, an investor, or a first-time homebuyer, here are the trends you should look out for in 2017.
- Millennials are Beginning to Buy. Previously, many thought the housing market was doomed because Millennials would never buy homes. Of course this is not true, due to the fact that Millennials would still settle down and create families eventually, even if it’s expected that this demographic will settle down later and have smaller families. Due to this fear, housing prices dipped. Now, the Millennial generation has become the largest population of homebuyers in the U.S. today.
- Mortgage Rates Will Change. Mortgage rates slightly fluctuated in the last year, due to global economic reactions, such as when the UK exited the European Union. In addition, the political climate had lenders on the edge of their seats until Trump got elected, which boosted rates to about 4% due to the optimistic outlook over Trump’s promise to drive taxes down. Rates will likely adjust as Trump’s presidency develops over the next year.
photo Alina Ku-Ku via Shutterstock
Hotspots for Real Estate Over the Past Few Years are Growing in Value. If you are a real estate agent or you are looking to buy, you have likely heard of the cities that are attracting the most buyers. Cities that were previously unattractive compared to popular cities like Los Angeles and New York have become more appealing to many, who now seek humbler options to prevent the chance of foreclosure. Midwestern cities such as Minneapolis, Madison, and Columbus. Other recently popular cities such as Seattle, Denver, and Austin will continue to see a rise in buyers but also a rise in prices following the trend.
- Rent Prices Will Remain Stable. Those who were out of jobs, both young and old, flocked to cities when the housing market fell through to downsize their living expenses. Traditionally, city-living has had the appeal of being closer to amenities, public transportation, and cheaper rent. Over the years however, rent prices skyrocketed due to the high demand created by the economy. Some cities have such high rental rates that it takes up the majority of their income, which has become a historic ratio. However, rent will likely become stable as more people move out of the cities. Multi-family units and townhomes have become more popular for young families that seek to make the transition from smaller apartments to homes. If you invest in a property like this remember that tenant background checks are essential, especially because this saturated rental market means you have your pick of the crop. Use an outside service like Transunion SmartMove to get you started.
- People are Moving Back to the Suburbs. In some areas, the suburbs were all but empty because people clung to cities for more affordable living. But now that rents are higher, more people are seeking affordable housing in the suburbs. Cities simply have less availability and higher rates, and those starting to settle and make families want to be prudent about what they can afford, which is driving people to suburbs.
- Homes will Become Less Affordable. While wages are expected to increase due to the steady rise in the economy, so will home prices. Those making a median income will experience difficulty finding an affordable home. Just take a look at a site like Zillow and browse the prices of homes in your area; you’ll likely notice an upward trend. There is once again a trend of areas that are earning higher wages buying homes that are not affordable for their income. This is similar to what happened before the housing bubble burst, except you would not have known in that time because homebuyers did not have to verify their income to obtain a subprime loan.
Staying abreast of the trends in 2017’s real estate market is vital for savvy investors. Keep these trends in mind as you make your business decisions over the course of the year.
Author: Zainab Sheikh
