About this time last year, some of the smartest minds in real estate predicted 2016 to be another robust year for many U.S. markets.
There was reason to be optimistic. Tight supply in many areas pushed prices up 4% nationally in 2015, following a 6.4% hike in 2014, according to Clear Capital, a provider of real estate data and analysis.
But depending on where you live, 2016 endured an uneven year. While prices are set to see modest gains again this year, some important real estate markets showed signs of slowing.
Miami saw home prices rise 10.1% in 2015, but prices have been falling much of the year and most observers doubt that market will see double-digit gains in 2017. The same could be said for San Francisco, Seattle and Denver – three western markets that saw sharp increases the past three years but are all poised to come back down to earth.
Even in New York City, where property prices had ranked among the highest in 2015 and 2016, a glut of new housing at the high end is leading some to predict a severe slowdown in the country’s biggest housing market next year.
Meantime, many experts expect the seven-year run of historically low mortgage rates that encouraged home buying to come to an end in 2017, as mortage rates begin to creep back up. Mortgage rates have jumped by roughly half-a-percentage point since late October, reflecting expectations that President-elect Trump’s pro-growth policies will drive up interest rates.
Federal Reserve Chairwoman Janet Yellen is widely expected to use her press conference Wednesday to announce an interest rate hike.
So what can we expect in 2017? A year of slowing, yet moderate growth, say many real estate economists. Below, a sampling from some property experts.
Nela Richardson, Redfin Chief Economist
‘Strong buyer interest, better access to credit, and a modest increase in inventory will allow home sales to grow, but not as much as in 2016. Price growth will hold steady. Homes will sell even faster next year, breaking this year’s record as the fastest real estate market. Although growth in new construction may be hindered by new immigration policies, we still expect to see more homes built in second-tier cities and more Millennial homebuyers moving from the coasts to smaller and inland markets where they can find an affordable starter home that meets their aesthetic requirements.’
Gabby Warshawer, Director of Research, CityRealty.com