Housing Forecast for 2017

In the recent National Housing Forecast for 2017 by Realtor.com, Joe Kirchner made a number of predictions.

Millennials and baby boomers will dominate the market for the next 10 years. I completely agree, as the staggering numbers of Americans hitting 65 continues year after year, the type of housing they will require must keep up. However, since 65 seems to be the new 55 and they aren’t moving into Assisted Living just yet, I predict a surge in 55+ Community development that will be seen in the Midwest and South, including patio home communities that were so prevalent in the 1990’s. Also, millennials, with strong incomes, will be demanding above average housing that must be superior to the Class A apartment offerings out there now that are scooping up that demographic in big chunks. They aren’t going for the starter homes like the rest of us did.

Slowing price appreciation – The author indicates 3.9% appreciation in the next year, down from 4.9% in 2016. This is obviously due in part to the 0.4% increase in the interest rate (40bps), which increases the monthly payment on an amortized loan. Also, with inventory still below normal levels, the number of transactions is likely to be down a bit as homes are harder to buy due to increased competition.

Overall, I’m glad to see a leveling out of the market. Predictability is great for Realtors and appraisers because there is more data to analyze over a longer period of time.