If you are a little skeptical about the US housing market this year due to the unraveling of major political and social events, be rest assured that the housing market forecast is looking much better than last year.
With a growing US economy, unemployment rates will continue to drop and consumer confidence will be on the rise to entice real estate markets all through 2018. Consequently, people will have many incentives to sell houses, buy houses, and get more mortgage loans.
Top 5 Housing Market Trends for 2017
1. Growing US Economy
In general terms, the overall state of the economy is the most significant driver of real estate investments and the real estate business. When the economy is strong and growing well, certain aspects of the housing market are expected to also see positive growth, but when the economy is in a downturn, the housing market forecast wouldn’t look too optimistic. Housing prices largely depend on key economic factors like GDP, unemployment, and income growth. Housing starts and home sales are directly tied to an economy’s health, i.e., as economies slow down, financing real estate becomes harder and in turn not only do fewer home buyers enter the housing market, but real estate properties take longer to sell. As we approach the half point of the year, the US GDP growth is set to increase to 2.1% by the end of the year, while the unemployment rate is expected to drop to 4.5% in 2017 and beyond. With the growing economy, there will be more real estate activities and a turn up in the housing market. Ultimately, there are more home buyers, more housing supply, and more financing means to make this year’s housing market forecast hit a positive note.
2. Rising Interest Rates
Housing markets are active, and interest rates are higher. Mortgage interest rates have slightly increased over the past year, but don’t fret just yet because the increase will not impede the real estate market activity in the US. The rates have gone up, but to no higher than 4.3% on the 30-year fixed rate. More and more prospective home buyers and real estate investors are borrowing money and getting loans to finance their real estate investments. People buy and sell houses in all interest rate packages, and it doesn’t look like they would stop anytime soon. Mortgage activity is up 3% year over year despite the rising interest rates in 2017. If you are thinking of investing in real estate this year, don’t let mortgage rates deter you from finding financing means to buy your next home or investment property. The rising interest rates is a key trend in the housing market forecast because mortgage activity is strong and borrowers are taking advantage of financial resources to buy a new home and delve deep into real estate ventures.
3. More Credit
Starting the year on a good note, the housing market forecast features more lenient credit qualifications for borrowers. In consequence, real estate investors are finding it easier to get a mortgage loan to buy an income property and invest in the real estate market. With rising interest rates, banks are cutting back on mortgage restrictions and making it easier for buyers to take out loans to finance their real estate investments. The Federal Housing Administration has lowered the mortgage fees for first-time home buyers, giving more access to borrowers to mortgage credit. Furthermore, mortgage finance companies like Fannie Mae and Freddie Mac are making it less difficult for buyers in expensive markets to finance their purchases in the housing market. In short, these lenient credit standards continue to increase the number of borrowers and entice more housing market activities across the country. All in all, you have a good chance to get approved for a mortgage loan today to finance your new rental property, whether it is a condo, a single family home, or a multi family home. If you are uncertain about the type of property you want to buy, head over to Mashvisor to find the best matches for you. You will get access to thousands of properties with a good cap rate and a desired cash on cash return in your area of choice. The US housing market forecast for 2017 is looking more promising than the previous year.
4. More New Homes
Residential construction activity has been on the rise since the beginning of this year, and it doesn’t look like it is slowing down anytime soon. The US housing market forecast looks sunny side up for home buyers and home builders due to the higher wages, looser credit requirements, and the increased demand from buyers. The housing market forecast includes an overall positive trend in home construction, specifically for single family home units. This year, housing starts are projected to increase by 6.5%, with single family and multi family units increasing by 9.1% and 1.5%, respectively. An increase in home starts has the potential to increase overall demand and boost supply.
5. Housing prices are higher
The last trend in the housing market forecast is the rise in home prices. Prices will increase but more slowly. With the growing economy and stronger job and wage growth, price increases will stabilize because homebuyer demand is much stronger than last year. Rental affordability will improve this year, but it is worthy to mention that major cities like New York and San Francisco are already considered unaffordable for many and these markets will remain unaffordable this year as well. With that being said, there is a continuing positive trend in homes for sale. Home prices cannot rise faster than income levels and with the current high consumer confidence numbers and low unemployment rate, the housing market forecast is looking better than last year’s figures.
Don’t be wary about the housing market this year and don’t hold back on investing in real estate, things are looking a lot less volatile than last year and the housing market is trending on a positive note. All in all, the US housing market forecast is looking good for the remainder of the year and beyond. To help you make smarter investment decisions, sign up for Mashvisor to get quick and easy access to thousands of properties across the country in an instant.