2017 Market Outlook: 5 Trends
HOUSING MARKET NORMALIZATION
- Normal Market Conditions
- Buyers have access to inventory
- Sellers have predictable timeline to sell a home
- Interest Rates are fairly predictable
- MSI = Balanced
- Many markets will have a balanced inventory
- 4-6% increase in value
- Smooth sailing with less volatility
RISING INTEREST LANDSCAPE
- Its happening. No more crying WOLF!
- Rates track closely with 10 year treasury and supply and demand of trading in mortgage securities market.
- Overnight rate is tied to the Federal Reserve
- Anticipating .25% a quarter
- Loosening regulations may shine light on some more exotic mortgage products
RENT V BUY
- People will finally overcome analysis paralysis
- Increasing market values have forced many to rent v buy
- In many markets rents increased but not as much as home values.
- Rents are stabilizing
- 1 – Home pricing is less volatile
- 2 – Rates are promised to increase but still historically low
- 3 – Buyers are crunching numbers on what it means to continue to rent, what they can afford now, and how much their purchasing power will decrease with interest rate increases.
- These 3 factors are time-bound and have not occurred simultaneously since the 2008 downturn.
- Predicting a big increase in renters moving to buyers
MILLENNIALS AND BOOMERS TO PRIME THE ENGINE
- ⅓ of the workforce is millenials – who will dominate first time buyer category beginning in 2017 and many years to come.
- 35% of homeowner population are baby boomers
- Life changing events lead to multi dimensional transactional volume
- Both of these groups believe in the value of homeownership and the pursuit of the so called american dream’
WILD CARD TRUMP
- We have no idea what trump is going to do
- Likely more positive than negative for the real estate industry
- Focusing More on the Questions rather than the answers:
- What will Trumps real estate background, proposed loosening of banking regulations?
- Trumps 550 Billion in transportation and infrastructure will drive demand in many markets?
- How will Trump interact with the Federal Reserve given his public dislike of Janet Yellen?
- Where do Fannie and Freddie fall on his priority list?
Flash back to 2016 Market Outlook – pretty good in hindsight!