DAILY REAL ESTATE NEWS | THURSDAY, DECEMBER 01, 2016
The national housing market is largely predicted to moderate in 2017, but a handful of metros are expected to beat expectations. In fact, 10 markets are looking like hot-beds for growth in the new year with Phoenix, Arizona being number one.
Realtor.com®’s research team has flagged markets that will likely see average price gains of 5.8 percent and sales growth of 6.3 percent in 2017. Those gains would exceed next year’s anticipated national growth of 3.9 percent in home prices and 1.9 percent in home sales.
As such, real estate professionals in these 10 markets should expect a booming business in 2017. Realtor.com® notes these are the hottest housing markets to watch in the new year, based on price and sales gains:
1. Phoenix–Mesa–Scottsdale, Ariz.
2. Los Angeles-Long Beach-Anaheim, Calif.
3. Boston-Cambridge-Newton, Mass.-N.H.
4. Sacramento–Roseville–Arden-Arcade, Calif.
5. Riverside-San Bernardino-Ontario, Calif.
6. Jacksonville, Fla.
7. Orlando-Kissimmee-Sanford, Fla.
8. Raleigh, N.C.
9. Tucson, Ariz.
10. Portland-Vancouver-Hillsboro, Ore.-Wash.
Why are expectations so high for these 10 markets? Realtor.com®’s research team notes that strong local economies and population growth are helping to fuel sales. Also, the top 10 housing markets have other commonalities, such as relatively affordable rental prices, low unemployment, and large populations of millennials and baby boomers.
Top Housing Trends for 2017
Next year’s predicted slowing price and sales growth, increasing interest rates and changing buyer demographics are setting the stage for five key housing trends:
- 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. Although increasing interest rates have prompted realtor.com® to lower its prediction of millennial market share to 33 percent of the buyer pool; millennials and baby boomers will still comprise the majority of the market. Baby boomers are expected to make up 30 percent of buyers in 2017 and given they’re less dependent on financing, they are anticipated to be more successful when it comes to closing.
- Midwestern cities will continue to be hotbeds for millennials – Midwestern cities are anticipated to continue to beat the national average in millennial purchase market share in 2017 with Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, leading the pack. This year, average millennial market share in these markets is 42 percent, far higher than the U.S. average of 38 percent. With strong affordability in 15 of the 19 largest Midwestern markets, realtor.com® expects this trend to continue in 2017 even as interest rates increase.
- Slowing price appreciation – Nationally, home prices are forecast to slow to 3.9 percent growth year over year, from an estimated 4.9 percent in 2016. Of the top 100 largest metros in the country, 26 markets are expected to see price acceleration of 1 percent point or more with Greensboro–High Point, N.C.; Akron, Ohio; and Baltimore–Columbia–Towson, Md., experiencing the largest gains. Likewise, 46 markets are expected to see a slowdown in price growth of 1 percent or more with Lakeland–Winter Haven, Fla., Durham–Chapel Hill, N.C.; and Jackson, Miss., undergoing the biggest shift to slower price appreciation.
- Fewer homes on the market and fast moving markets – Inventory is currently down an average of 11 percent in the top 100 metros in the U.S. The conditions that are limiting home supply are not expected to change in 2017. Median age of inventory is currently 68 days in the top 100 metros, which is 14 percent – or 11 days – faster than U.S. overall.
- Western cities will continue to lead the nation in prices and sales – Western metros in the U.S. are forecast to see a price increase of 5.8 percent and sales increase of 4.7 percent, much higher than the U.S. overall. These markets also dominate the ranking of the realtor.com® 2017 top housing markets, making up five of the top 10 markets on the list (Los Angeles, Sacramentoand Riverside, Calif., Tucson, Ariz., and Portland, Ore.) and 11 of the top 25 (Colorado Springs, Colo.; San Diego; Salt Lake City; Provo–Orem, Utah; Seattle. and Oxnard–Thousand Oaks–Ventura, Calif.)