What Lies Ahead in Real Estate in 2017?

 

 

 

What lies ahead in real estate in 2017?

Many clients have asked me what they should expect in the coming year(s). Real estate is a critical sector of the economy that affects buyers, sellers, renters, landlords and homeowners and there is always some uncertainty that occurs whenever a new administration comes into office.  Whether there will be a significant change to regulations and tax reform, and how those changes may effect the market, remains to be seen.

The hope is that there will be a stable real estate framework in which buyers and bellers can best operate. Most analysts nationally and locally are in agreement that despite the rumblings of the current administration, 2017 should remain a strong year for real estate and both buyers and sellers will find opportunities to fulfill their needs.

Here are some topics to keep an eye on:

Recovering Sales

Home sales in California are expected to increase 1.4 % up slightly from 2016 according to the California Association of Realtors (CAR).  In some regions, such as San Diego, factors such as low inventory and high demand and increases in interest rates may have a greater impact on sales.

Understanding Demographics

Millennials are expected to have a great impact on the market this year according to Realtor.com.  A little more than half of potential buyers are expected to be first-timers, with more than 60% of them being under 35 years old.

Construction Market

Although the health of the U.S. construction market is good we are still under historical norms.  Builders are constructing fewer homes in the lower priced categories where demand is strong and companies are facing higher land and permit costs along with regulatory restrictions.

Interest Rates

After years of super historically low rates we will likely see some increases on the horizon as the Fed makes adjustments and inflation fluctuates.  Still, for 2017 we should still be in the historically low category as seen by this rate chart showing 2000-2016 rates. For the first few months of 2017 rates have been in the low 4%.

 

 

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