Charles Jones Blog
What is the outlook for the housing industry in 2017? No one can gaze into a crystal ball and predict how the next several months will play out. But many in the housing industry have commented on possibilities for 2017. What are some experts saying about the upcoming year and the residential housing market?
Joel Kan, Associate Vice President, Industry Surveys and Forecasts, Mortgage Bankers Association
“We expect the 30 year mortgage rate will hit 4.7 percent by the end of 2017, reach 5 percent by the second half of 2018 and increase further to 5.5 percent by the end of 2019. With a large segment of borrowers having taken advantage of sub-4 percent rates in recent years, refinance volume will decrease even though rates in the 5 percent range are still very low by historical standards … Home purchase volume will be supported by a robust job market, a younger generation slowly moving toward homeownership age, and as increased housing transactions will facilitate more move-up buying.” 1
Nela Richardson, Chief Economist, Redfin
“Strong buyer interest, better access to credit and a modest increase in the number of homes for sale will allow home sales to grow, but not as much as in 2016 … Redfin expects median home sale prices to increase 5.3 percent year over year ... Existing homes sales are forecasted to increase 2.8 percent in 2017 … We expect mortgage interest rates to increase, but to no higher than 4.3 percent on the 30-year fixed rate … We believe price increases will hold steady despite slowing sales growth, because homebuyer demand is stronger now than it was at the same time last year, and because we foresee a small uptick in homes for sale.” 2
Rodrigo Sermeño, Kiplinger’s
“Inventory is likely to remain low … but it could increase by year-end … Limited inventory, particularly for lower-priced homes, has made it harder for entry-level buyers to enter the market. The rise in mortgage rates and prices is likely to prompt more homeowners to put their homes on the market, which would lead to an increase in overall inventory later in 2017 … New-home sales will likely decline in the next couple of months because of higher mortgage rates.” 3
Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors
“Changes to Dodd-Frank financial regulation will occur in some form … There could be a move away from stringent mortgage underwriting to more normal lending … Fannie Mae and Freddie Mac may not survive. This would be most unfortunate … We should view supporting Fannie and Freddie in the same way as we view supporting FDIC deposit government guarantee at banks - to help smooth the financial market.” 4
Real estate is very much a local business and national forecasts don’t take into account local market dynamics. How do you see your area of operation performing in 2017? What do you think will be the major trends in the housing industry this year? Do you expect your business to decrease, stay the same or increase?
The information provided is for informative purposes only and is not intended to be legal advice or a legal opinion. For legal advice, please consult an attorney.
1https://www.mba.org/Documents/Research/Forecast%20Commentary%20Jan%202017.pdf 2 https://www.redfin.com/blog/2016/12/redfins-seven-housing-predictions-for-2017.html 3 http://www.kiplinger.com/article/business/T019-C000-S003-housing-market-forecast-housing-starts-home-sales.html 4 http://www.forbes.com/sites/lawrenceyun/2016/11/10/trump-presidency-and-impact-on-real-estate/#3cace3f340b7