Housing Outlook 2017: Eight Predictions From The Experts

 Discover eight things housing experts expect to see in 2017 below.

In so many ways 2016 was an unprecedented, volatile and, for some, excruciating 12 months. And the housing market was not immune to the year’s whims. At the start experts anticipated a pick up in building activity, instead builders are still not producing enough homes. Meanwhile, home prices appreciated beyond expectations and mortgage rates toyed with record lows before crossing 4% for the first time in two years. 

Here are eight things housing experts expect to see in 2017:

1. Prices will continue to rise--but more slowly. 

Prices rose every month last year (through October) with the largest gains coming in the later half and a 5.61% increase in national. Experts expect prices will continue their climb, but gains will slow. "We believe price increases will hold steady despite slowing sales growth, because homebuyer demand is stronger now than it was at the same time last year, and because we foresee a small uptick in homes for sale," notes Nela Richardson, chief economist at real estate brokerage Redfin.

2. Affordability will worsen. 

Wages are expected to grow in America's big cities this year, but the share of homes affordable to someone earning the median income is not. This trend, which has stymied many aspiring to buy their first home over the past few years, will be intensified by a continued shortage in low- to moderate-priced inventory and rising mortgage rates. "The irony of the modern housing market is that the places where we are seeing wage growth are places where people can't live because they are too un-affordable. There is a mismatch," says Nela Richardson, chief economist at real estate brokerage Redfin.

3. Mortgage rates will be volatile. 

In December 2016, the Federal Reserve bumped short term interest rates o between 0.50% and 0.75%, the second hike in a decade. The 25 basis point move left rates low by historic standards and on did not have a huge impact on mortgage rates. However, the Fed's policy makers indicated they anticipate three hikes in 2017, which could have a larger effect. That's up from the two officials projected before Donald Trump was elected. That said, Fed projections can be taken with a grain of salt: they also originally thought they would hike three times in 2016.

4. Credit availability will improve--maybe. 

By and large early Trump administration priorities are not expected to deal directly with housing. However, the president-elect and his team have made it clear that they hope to roll back much of the post-crisis financial regulation laid out in the Dodd-Frank Act. In theory, this could open up banks to lend more freely to wide-range of would be buyers.

5. Supply will improve but remain short. 

Declining inventory was without a doubt the defining feature of the housing market in 2016. It led to price appreciation, as well as a hyper fast market for buyers and discouraged would-be-sellers who feared entering the buying fray. A complete turnaround is unlikely in 2017, but there are some signs the coming year could see a small bump in housing supply--at least on the new home front.

6. More Millennials will become homeowners--and renters. 

According to Zillow half of all buyers are under age 36. Not every economist agrees with this assessment, however it is clear that Millennials will continue to make up a large and growing portion of the buyer pool. Of course much of this is due to the fact that Millennials--adults born after 1980--are now the largest adult generation and make up the greatest percentage of the workforce. Redfin expects Millennial homebuyers will move from the coasts to "inland markets" where starter homes are more affordable.

7. Competition will grow fiercer.

In 2017 sellers will maintain the edge over buyers as demand is expected to increase. In 2016 the typical homes stayed on the market for just 52 days, about a week faster than in 2015 and the fastest year since Redfin began measuring in 2009. The brokerage expects 2017 to be even faster.

8. Political uncertainty will be replaced with policy uncertainty. 

Experts agree that three of President-Elect Donald Trump's policy priorities could meaningfully impact the housing market: his pledges to spend more on infrastructure, to cut taxes and to crack down on immigration. The consensus is that in the very short term any moves in these three ares could have a neutral-to-positive impact on the housing market. Over the longer term, however, opinions vary widely. 

Click To Read Full Article On Forbes Magazine

Laura Kellam

Laura has held her California real estate license since 2001, and she began her personal endeavors in real estate in 1996, as a single-family residential investor.  Well-versed in the Los Angeles market, Laura’s 20 years of experience as a buyer, a project manager during renovations and a seller throughout numerous single family residential transactions, and now in recent years, her additional and vast experience working with buying, selling and investor clients; all gives her a unique ability to service her clients needs. Laura treats each transaction with attention to detail and a complete understanding of both the excitement and the challenges of preparing, buying and selling a home. This experience allows her to achieve maximum results for her clients in a way that is as stress free as possible for the client.

Laura currently works with BERKSHIRE HATHAWAY HOMESERVICES, CALIFORNIA PROPERTIES, and holds active membership California Association of REALTORS® (CAR) and the Beverly Hills/Greater Los Angeles Board of Realtors® (BHGLAR).