Some of the negative market conditions of 2016 will continue, but increasing housing demand and changing policies could improve production
Affordability will worsen, buyer competition will be fierce, and mortgage rates will be volatile. Forbes is pessimistic about the housing market in 2017, offering eight predictions for the year ahead.
But, it’s not all bad. Credit availability has a chance to improve if the Trump administration rolls back Dodd-Frank regulations and privatizes government-controlled mortgage lenders Fannie Mae and Freddie Mac.
After years of delaying life events, more Millennials are slated to become homeowners and renters. Adults born after 1980 are now the largest adult generation and make up the largest portion of the workforce. Forbes cited a Redfin piece that expects Millennials to migrate toward the middle of the country, where starter homes are more affordable.
The number of available homes is expected to be low in 2017, but supply will increase. Strong demand should spur building.
“Controlling for the number of households in the U.S., housing starts are still only 55% of the 50-year average,” wrote Trulia Chief Economist Ralph McLaughlin. “The historical view looks like there’s also more room for housing starts to grow.” Construction, however, is unlikely to improve the affordability picture because there is a growing premium for new homes and most building in recent years has been on the high-end, since builders feel they can get a better return there.