Residential Real Estate Predictions for 2017
According to The Active Home Shopper Survey, a new study released in September by Realtor.com, major changes are afoot in the national real estate market. Here are five predictions based on the new study.
1. This year 52% of home shoppers identified themselves as first time home buyers. This represents an enormous shift from past years. In last year’s survey, for example, only 33% identified as first time buyers. Older millennials, aged 25–34, represented a full one third of the market. When all millennials (all those under age 35) are included, the percent jumps to a full 61%. The top reasons cited by this cohort for buying a new home is getting married and increasing family size. According to Jonathon Smoke, chief economist for Realtor.com: “With so many first-time buyers in the market, competition will be fiercer next year for affordable starter homes…” The increased competition should result in rising prices for this class of residences.
2. With a younger age group dominating the market, affordability and mortgage qualifying is expected to replace a lack of inventory as the most significant barrier to homeownership. After all, the younger a person is, the less time he or she has had to establish strong credit and a high enough salary to secure a mortgage. In last year’s survey, the main concern of buyers was the lack of appropriate inventory, cited by 40% of home buyers. This year, the majority of respondents cited affordability, the down payment and securing a mortgage as the main barriers.
3. The millennials are a far cry from the “live for today” generation that came of age in the sixties. They are more grounded, family oriented and forward looking. They cite safe neighborhoods, larger yards, privacy and addressing the needs of their families as their primary concerns. Most impressively, their third top priority is to make a financial investment that will grow over time. These millennials show a strong preference for single family homes (39%) and townhouses (34%) and a far lower interest in multi-family homes (15%), condos (10%) or mobile homes (2%).
4. With family and safety as priorities, first time homebuyers identify the suburbs as their first choice when buying a home (50%). Conversely, shoppers are least interested in houses with less space, being in an established neighborhood or having mature trees and landscaping.
5. Today’s homebuyers are mature in their planning, as well. A majority of the respondents considering a home purchase planned to buy in seven months’ time or longer. Apparently, they are cautious and plan to take the necessary time to research the market properly. Further evidence of their sophistication is that they report that asset accumulation is a priority – they do not wish to rush into what could be a mistake in terms of planning and affordability.