· Boomers not moving as often: 71% of Californian’s aged 55+ haven’t moved since 1999 and the majority do not plan to sell home when they retire
Predicting how the real estate market will behave is never an exact science and 2017 could be especially difficult to predict.
I think at this point it will be a very interesting year as we see what policies President-elect Trump will put into place.
Trump appears to be trying to create a new spirit for business so that even small businesses might stand a chance in 2017 and beyond. This could help more people feel confident about buying a home, or investing regardless of the prices. However, planned repatriation of business back to the US may come with a big price — a high dollar and strong inflation.
Top Factors That Will Affect The Housing Market In 2017Increasing interest rates and changing buyer demographics are setting the stage for five key housing trends:
1. Millennials and boomers will dominate the market –– Next year, the housing market will be in the middle of two massive demographic waves, millennials and baby boomers, that will power demand for at least the next 10 years.
More millennials will become homeowners, driving up the home ownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States. Millennials are expected to make up about a third of the buyer pool.
In the last several years baby boomers' participation in the housing market has dwindled, although that may be starting to change as the oldest baby boomers are entering their late 60s. While a sizable number want to downsize to control expenses, we're seeing others move to the biggest house they've ever owned because they've got children and grandchildren and they want them to come visit.
1. Fewer homes on the market and fast moving markets – Inventory is currently down The conditions that are limiting home supply are not expected to change in 2017. For those considering new construction in 2017, it’s worth considering the added cost that may come amidst ongoing construction labor shortages that could get worse if President-elect Trump follows through on his hardline stances on immigration and immigrant labor.
The percentage of people who drive to work will rise as homeowners move further into the suburbs seeking affordable housing.
2.Interest rates: A 30-year fixed rate mortgage averaged 4.32% for the week ending December 29, up from 4.01% a year earlier. Mortgage rates forecast to stay low and could reach 4.5% in 2017. With Trump in power, lending requirements are expected to be eased.
3. Home prices rising:Low inventories and modest economic growth should push up price growth next year. If economic indicators are any guide, the housing market is heading for a fifth straight year of rising home prices, increased sales, more rent hikes and booming home construction.
China’s foreign exchange regulator announced a new policy effective January 1, 2017 that affects all individuals who are looking to buy overseas real estate China’s capital controls are becoming stricter.
· Citizens will now have to fill out an application form stating the purpose of their foreign purchase. The purpose cannot be real estate investment, but it can be done for purposes such as travel, education and so on.
· Prepare for a longer time to close deals with Chinese buyers.
· Chinese investors continue to find ways around the controls.
· I expect that the average purchase price for Chinese buyers will decrease in the next few years. More middle income class Mainland Chinese are looking to invest in overseas properties, and more second-tier cities and third-tier cities are being targeted due to budget and capital controls.
California Association of Realtors, Leslie Appleton
US Dept. of Commerce, Bureau of Economic Analysis
Statistics are from MLS listings and do not include private sales