You can predict the real estate world to become as a rocket fuel in 2017, if the United States economy hits escape velocity. To be more specific, housing can be measured on to compose nearly 15% of GDP.
Even though, the signs are there for changes, the builders seems to be cautious and show reluctance to dive their headfirst into expansion of their operations back. The most five expected trends that will shape the real estate market this year are listed below.
For the second time since 2006, the Federal Reserve interest rates have been raised during December 2016 and most of the members of the Federal Reserve board who are responsible for rate setting expect there will still 3 more increase in the rate during 2017.
Due to which, there will be an increase in the mortgage rates, and eventually prospective home buyers will find it very difficult to afford for their dream home. Still, according to Nela Richardson, Chief Economist in Redfin, there will not be much increase in mortgage rate more than 4.3% on the 30 year fixed rate.
Redfin’s Nela Richardson also added that even though the rates may increase, there is expected to be more available on mortgage credit because of the slightly liberalised lending standards.
Also, the Federal Housing Administration will probably decrease the fees they are charging for the first-time home buyers, might be as a continuation of the trend set during the Obama administration.
Increase of New Homes
Despite a rise in the mortgage rates, there seems to increase in the new home sales. Even though, as per the recent data released on the new home construction, the builders have set back on getting into new projects during November, the overall trend related to new home construction is thoroughly positive.
Hope this will continue during this year, as new home constructors are encouraged by looser credit, higher wages and elevated demand from the buyers.
The Constant increase of Medium-sized cities
One among the major reason behind the present economic recovery is that top-tier economic cities such as Seattle, San Francisco and New York have experienced a rise in the value of the property due to workers flock to these places in order to enjoy the benefits of high-paying jobs.
Due to this, these cities experience a strain in the real estate markets as new construction is frequently unable to maintain the pace, matching the demand from the buyers due to the geographical hindrances and restrictions levied on them by the local government.
Hence, now most of the youngsters show interest in buying a home in Medium-sized cities as they find it more affordable. This trend is expected to continue during 2017 also.
Rise in Foreign Buyers
An important trend that assists in driving prices exceeding the realm of affordability in locations such as Los Angeles and New York is due to an influx of foreign buyers of United States real estate.
This has created an impact only of late, fueled in specific by the china buyers who are hunting for safe locations for storing their wealth, away from their homeland slow economic condition, still oppressive financial polices make it hard to earn fair returns on such savings.