5 Signs of Growth in the U.S. Housing Market
There are a lot of predictions being made for what 2017 will bring the housing market. We’ve already experienced one interest rate increase by the Fed (in 2016), which is indicative of increasing optimism in the economy, and many are predicting three increases over the course of 2017.
2016 was a roller-coaster ride with less new builds than expected and higher home appreciation than previously predicted. Unlike other areas, most people do agree that 2016 was a good year for the housing market with national prices finally inching past the 2006 peak.
But what will 2017 bring us?
Buying a New Home? Want to Prevent the Stress of Unexpected Costs?
Be prepared with our guide to Understanding Closing Costs.
5 Housing Market Growth Indicators in 2017
Home buyer demand is stronger than this time last year.
Although prices climbed steadily over 2016, most of the growth we saw in housing prices was at the later part of the year. As long as demand remains strong and inventory remains steady, we’ll see growth.
Increased wages and low unemployment.
In November of 2016, the U.S. unemployment rate reached a nine-year low of 4.6% and wages are increasing, although minimally but there’s been a lot of wage growth in areas with a high cost of living. These two factors often feed growth in the housing market. The one thing pundits will watch, again, is inventory. If wages remain steady, the area we worry most about is starter home inventory. Starter home inventory has declined nearly every month for the past five years.
Low risk of bubble crashes in most cities.
Unlike the housing marketing in 2006 with over-inflated pricing, the market has been creeping upwards, not skyrocketing. There is little concern for most areas that housing prices and growth will do anything other than remain constant.
Millennial buyers are aging.
As the Millennial generation ages and hits more critical earning years, they’ll have more loans paid off and more disposable income causing them to look for homes, not rentals. Since the starter home inventory is the tightest, this increase in income due to the advancement in their careers may be enough to push them into skipping the starter stage and purchasing a house more in line with their dreams.
The fear of mortgage rates going up could drive more home sales.
For home buyers who have been on the fence, the idea that mortgage rates are expected to increase three or so times in 2017 may drive them into action. If they’re considering home buying anyway, it may behoove them to do so at the beginning of the year versus the end of it. With each meeting of the Fed, people watch the rate. No one wants to pay more for a home because of an increasing interest rate.
Are you thinking about buying a home in 2017? If so, remember that you have a choice when it comes to title companies. At Bay National Title Company, we want each of our customers to enjoy the closing process, not dread the paperwork. We provide e-closings for an efficient closing experience. If you’d like to learn more about how we approach the relationship with our customers, contact us today.