2016 was the year when US real estate market finally seemed to have completely overcome the housing market crisis that happened nearly a decade ago. Growth in wages, low fuel prices, interest rates, & other key factors allowed more and more people to enter the real estate ecosystem, making the market healthier.
But the interesting turns of events in early November that resulted in Donald Trump winning the presidency have made many think; ‘what’s next?’
There are numerous speculations that the upcoming Trump cabinet will bring policy reforms that might greatly affect the current real estate dynamics in the United States either ways. Apart from that, increasing number of individuals with better buying capabilities & technological advancements in recent time will also shape the US real estate in time to come.
Based on these considerations, Atef Halaka created a list of 5 trends that are likely to impact the US real estate market the most in 2017.
Home equity will continue to increase
A CoreLogic study states that home prices are increasing at a rate of 6.3% currently, and will continue to increase at roughly the same rate for at least a year from now. This in turn is bringing property owners higher equity returns. In fact, average equity amount has doubled over the past one year. In 2017, this trend will continue to fill the pockets of homeowners.
Mortgage approval will be easier
As mentioned earlier, with increased wages, more and more millennials will have the purchasing power to own properties. The Mortgage Credit Availability Index has been continuously growing for some time but a sudden rapid growth is being observed for past few months. Considering this shift, banks too will be willing to lend money easily to home buyers for a few years down the line.
Shortage of inventory despite new constructions
With new constructions in near-city locations, housing inventory is growing at a steady rate. But it is still not enough to accommodate 40% Americans who are living in rental properties. According to CoreLogic, this lack of supply in the housing market is the prime reason behind constantly increasing prices. With new construction rate still around the normal pace currently, the housing inventory will remain tight.
Foreign investments will decline
With constantly increasing home prices, foreign investment in the country have already been declining for some time. And now the ‘Trump presidency’ factor coming into account, we can expect this trend to grow further; at least until the new policy reforms come into action and allow foreign investors to analyze the cause & effect of their purchases in the States.
Drones for property inspection
Last but not the least, increasing commercial use of drones will also begin to impact the real estate industry. The property inspection through drones has already begun in 2016, especially by real estate agents. In coming time, it is certain that it will move further towards becoming a mainstream trend and will also be adopted by buyers & sellers both.
With somewhat record-low mortgage rates, steadily increasing property prices, & declining foreign investments, now seems to be a good time for Americans to make a real estate purchase; whether it is home purchase or investment for rental & equity returns. In conclusion, for most part, it can also be said that the ongoing trends will shape the coming years’ trends. Follow Atef Halaka on Twitter for more updates.