Rising home prices are projected to increase homeowners' equity over the next year. However, mortgage rates are expected to rise as the Fed continues raising rates in a strong economy, making it more expensive for borrowers to refinance or purchase homes. It is getting easier to obtain a mortgage as credit availability has increased. Rents are projected to see more modest growth of around 1.7% as new apartment construction adds to inventory and meets demand. The share of all-cash home buyers is expected to decline to historical levels of around 25% by 2019.

1. 9 Real Estate Trends
to Watch in 2017
By Massoud Aaron Yashouafar

2. 1. Rising prices will keep pushing
up homeowners’ net worth
According to a report from CoreLogic, home prices
are projected to rise another 5.2 percent through
September 2017. Over the past year, there has been
a 6.3 percent increase. Rising prices have doubled
the amount of home equity held by Americans. Last
year, the average homeowner gained more than
$11,000 in home-equity.

3. 2. But mortgage rates are
going up
• Rates for conventional loans shot up nearly a quarter of a
percentage point in the days following the election This was the
fastest increase since the ‘taper tantrum’ of 2013. The Fed is
expected to continue raising rates on a strong economy. Before
Trump’s election, the Mortgage Banker Association was
predicting that rates would reach 4.8 precent by the end of
2017.
• Therefore, borrowers who are looking to re-fi should do so
earlier in the year. Also, buyers should consider locking in their
rates during the closing process. Some worry that rising interest
rates could ruin the housing market, job security ad wage
growth are larger factors on home activity than interest rates.

4. 3. It’s getting easier to get
a mortgage
According to the Mortgage Credit Availability Index, it
is easier to get a mortgage now than it has been the
past 8 years. There is more availability of both jumbo
loans and low down-payment loans. Additionally,
banks may be more willing to work with borrowers
over the next few years as they look to make up for a
decline in refinancing businesses when interest rates
go up.

5. 4. Rents will continue to
level off
According to Zillow’s rent forecast, rents in mostly
large metro areas will continue to increase next year,
they’ll grow as just 1.7 precent next year. The modest
gains follow years of double digit growths in many
places and reflect inventory finally catching up with
demand. Builders are creating new apartment
buildings to accommodate the nearly 40 precent of
Americans who are choosing to rent rather than buy
housing.

6. 5. The share of cash buyers
will move closer to normal
For the first time since 2007, all-cash buyers fell
below30 precent of home sales this year. They’re
predicted to decline for the next two years until they
get back to their historical average of about 25
percent. This is good news for some homebuyers who
have struggled in recent years to compete with all-
cash buyers in bidding wars.

7. 6. New homes are getting
smaller
• For the first time since the recession, the median square
footage for new homes fell this year. Smaller homes are
the result of several trends controlling the real estate
market, including higher demand for homes close to city
centers where space is tight, and continued growth in the
“tiny home” movement.
• The change in homes reflects a renewed focus by
builders on the neglected market of entry-level buyers.
“They’re building smaller homes because people can’t
afford to buy the larger homes anymore,” Chief
Economist at Texas A&M’s Real Estate Center.

8. 7. Inventory will remain
tight
Although builders have increased production, they’re
only putting up homes at about 60 percent of the
normal pace. The total housing inventory at the end of
September increase 1.5 precent to 2.04 million
existing homes for sale, but that’s still 7 percent lower
than last year. Unsold inventory in September was at
a 4.5 percent-month supply, down from 4.6 percent
the previous month.

9. 8. Foreign buyers will play
a smaller role
Foreign buyers, who have helped fuel the luxury real
estate market in recent years, backed off a bit this
year due amid rising prices and an appreciated dollar
and increased scrutiny from the Treasury Department.
This trend might increase as foreign investors weigh
the impact of a Trump presidency on their purchase.

10. 9. It’s getting easier for
first-time buyers
After many years of the market shutting out first time
buyers, it has now become slightly more welcoming.
“On the supply side, builders are finding business
models to provide the level of product, such as
townhouses, that first-time buyers are looking for. And
on the demand side, wage gains and the
demographics of today’s millennials who are marrying
and having kids later, will help,” says Robert Dietz,
chief economist with the National Association of Home
Builders.