Rising Prices, Tight Inventory, And Smaller Homes: What To Expect In 2017

Several of the trends that shaped the housing market this year will carry over into next year

December 13, 2016

Mortgage rates are expected to continue to rise in 2017, but it should be easier for potential buyers to secure a loan. Banks may work with borrowers in an effort to make up for a decline in the refinancing business.

The Fiscal Times identified nine housing market trends for next year, most of which are already being experienced today. The median size home will get smaller, inventory will remain limited, and home prices will continue to rise.

Some new developments will return to the status quo, though. Foreign buyers are expected to wield less influence, and rents are projected to plateau. The share of all-cash buyers is expected to drop to the historical average of 25 percent.

First-time buyers may be the big winners of the new year. Millennials are becoming more secure in their jobs and are now better qualified for mortgages with low down payments.

After years of shutting them out, the market has become slightly more welcoming to first-time buyers. “On the supply side, builders are finding business models to provide the level of product, such as townhouses, that first-time buyers are looking for,” says Robert Dietz, chief economist with the National Association of Home Builders. “And on the demand side, wage gains and the demographics of today’s millennials who are marrying and having kids later, will help.”

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