Anyone who tells you that they can predict the ups and downs of the real estate market is probably either exaggerating their abilities or outright lying to you about them. In truth, none of us know what the market is going to do in the long run, but we do know that real estate has always rebounded and has proven to be one of the best long-term investment vehicles.
While we might not be able to predict exactly where housing prices will be at the end of the year, we can certainly take the information available to us regarding current trends and use that to forecast a reasonable estimate. Let's take a closer look at five key market trends for 2017 and how they might impact housing prices over the course of the rest of the year.
Renting Popularity Continues
Many agents thought that the rising popularity of renting instead of buying among millennials was a result of the 2008 real estate collapse. However, we are now learning that millennials are more concerned with avoiding the feeling of being tied down than they are impacted by traditional market influencers like interest rates and housing prices.
Even if housing prices and interest rates remain reasonable through the end of the year, there is still a strong likelihood that the majority of millennials will prefer renting to buying. This could be great for rental property investors, but not so good for sellers.
Interest Rates on the Rise
Speaking of interest rates, we are probably going to see those slowly tick higher throughout the course of the year. While most of the country has polarized views regarding our new president, the stock market is clearly a fan. As the market continues higher, the Federal Reserve will have less incentive to keep interest rates low.
That means that we are almost certain to see a few rate hikes through the remainder of 2017. This will likely be a slow increase, so it is still reasonable to expect rates to remain low compared to historic rates.
Predicting Overvalued Markets
Another trend that is gaining popularity is commentators attempting to pick the source and location of the next housing bubble. Home prices have shot through the roof in areas like San Francisco and Denver, so everyone in those markets is fearful that they simply cannot maintain that growth.
No one will debate that prices in these areas are sky high, but predicting the next collapse is a fool's errand. Unless you are confronted with some evidence along the lines of what was presented in The Big Short, don't fall for the click bait that some so-called "experts" are putting out there.
Less Red Tape for Mortgages
One positive trend that we are already seeing happen in 2017 is a reduction in the amount of red tape that buyers have to work through to qualify for a mortgage. Making it easier to get a mortgage will naturally increase the number of buyers in just about every market across the country. As this trend continues, sales should increase.
Unity of Place
Buyers are gravitating towards areas where they can live, work, and play in the same location. This concept has a number of buzzwords associated with it, but the idea is relatively straightforward. People want to reduce the amount of time that they spend commuting, so they are looking to buy in areas that have a healthy mixture of commercial and residential opportunities.
None of these trends is going to help you predict a radical change in real estate over the remainder of 2017, but using them all together will give us a decent grasp on where the market is going and how we can best capitalize on those movements. From the looks of it, 2017 is a good time to be in the real estate business.