The real estate market is an incredible dynamic force, with many variables at play. The market tends to change from year to year, as was the case between 2016 and 2017. So, what was the US housing market like last year and how is the US real estate market 2017 performing? Read on to find out!
Seller’s or Buyer’s Market
Before we even reveal the type of market in the two years, let’s review the differences between the two types of real estate markets. A seller’s market is a real estate market that prefers those wanting to sell investment properties. There are more potential buyers than real estate properties for sale in this market, giving property sellers an advantage. A buyer’s market, on the other hand, occurs when there are more properties for sale than property buyers in a real estate market.
What were the markets in the two years?
- Real Estate Market 2016: On a national level, the previous year was a year for the seller’s market. It was a great seller’s market for 2016. Nearly 5.3 million homes were sold!
- Real Estate Market 2017: Much of the same is expected in 2017, it will remain a seller’s market for the US on average. This trend is expected to change, however. The following year will see the US housing market shift towards a buyer’s market. What is also expected to change is for how long sold properties stay on the market. In the previous year, the average home that was sold stayed on the market for 4 weeks. Homes are expected to sell faster in 2017.
Where to Invest
- Real Estate Market 2016: A new trend began in 2016 concerning where real estate properties are purchased. Suburbs, and not urban areas, became the top areas to invest in. As more people, including millennials, head towards the suburbs, more real estate investing opportunities pop up in these areas.
Another trend emerged during the year. Secondary, mid-sized cities became the better real estate investment choice, as opposed to large cities. As a result, the top cities during the year were: Orlando, FL, San Antonio, TX, and Seattle, WA, among others. The top cities for Airbnb were: Memphis, TN, Las Vegas, NV, Indianapolis, IN, and Oklahoma City, OK.
- Real Estate Market 2017: The trend of investing in the suburbs over the city has increased during the current year. Medium-sized cities are also still the better cities to invest in. The top cities for traditional real estate investments in 2017 are: Denver, CO, Seattle, WA, Portland, OR, and Chicago, IL. For Airbnb rental properties, the best cities are: Forth Worth, TX, Nashville TN, Tampa, FL, and Orlando, FL.
Where to Avoid
- Real Estate Market 2016: While some real estate markets experienced great success, others became difficult to deal with. The reasons? Expensive home prices (which will be covered next), low economic growth, and population decline contributed to the situation. It’s no surprise then that cities like San Francisco, CA, New York City, NY, and Buffalo, NY had unpleasant housing markets during the year.
- Real Estate Market 2017: Not much has changed in terms of the worst cities for the real estate market in 2017. Some markets are still way too overpriced, as in San Francisco. Others have legal restrictions on certain property types (like Airbnb income properties) as seen in NYC.
- Real Estate Market 2016: What has caused the increase in home prices in 2016? There are different factors to account for in different cities, but for the national average, more demand than available houses led to more expensive real estate markets. On the national level, home prices increased every month, leading to a total of 5.6% increase.
- Real Estate Market 2017: Property prices have continued to increase, but at a slower pace compared to last year. The impact is largest in cities that are already too expensive, like New York City and San Francisco. Medium and smaller-sized cities are still affordable.
Mortgage Interest Rates
- Real Estate Market 2016: Mortgage interest rates increased in 2016, but they were still historically low overall. Certain points during the year have fluctuated mortgage rates. After Donald Trump won the presidency in November, mortgage rates jumped to 4%. Rates cooled down in June following the British vote to leave the EU, also known as Brexit. As a whole, however, interest rates remained low during the year. The average national rate was 4.3% for 30-year fixed-mortgages.
- Real Estate Market 2017: Mortgage rates are still historically low in the real estate market 2017. The current national rate hovers around 4.3%.
Who Are the Real Estate Investors
- Real Estate Market 2016: The previous year saw many first-timers investing in real estate. About 35% of home-buyers purchased an investment property for the first time. Most of these real estate investors were millennials. The median age of first-time buyers was 32. Foreign investors also became more of a part of US real estate in 2016.
- Real Estate Market 2017: The current real estate market followed the trends of last year’s market in terms of investors. Millennials are still a big portion of first-time buyers. Foreign investors have continued to invest in US real estate. Tourist-heavy cities, like Orlando, tend to have more foreign investors compared to other cities.
- Real Estate Market 2016: As mentioned earlier, around 3 million investment properties were sold in 2016. Construction has been increasing during the last few years, as more demand for real estate properties has continued.
- Real Estate Market 2017: Property construction will increase during 2017. As demand increases, so will housing starts. Single-family home construction, in particular, is expected to rise by a whopping 30%. Multi-family home starts, on the other hand, are expected to decline by about 10%.
To sum it all up, the real estate market 2017 will follow in 2016’s footsteps. The real estate market will remain a seller’s market. Secondary cities and suburbs are still the best places to invest, while big cities are generally avoidable. Housing prices are expected to increase moderately. Mortgage interest rates will still be low. Millennials and foreigners will continue to invest in real estate. And finally, home construction will continue to increase.
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