2017 Real Estate Trends

Fortune Finance recently published an article detailing real estate trends that will be on the rise throughout the next year. They entail the following:

1. Rising Rates


2. More Credit


3. More New Homes


4. The Continued Rise of Medium-sized Cities


5. Foreign Buyers Aren't Going Away

But how do these coming trends affect you? Let's go down the list.

1. With rising interest rates, there seem to be two separate mentalities: A) When rates rise, income rises so the housing marketing will be just fine, and B) Rising rates don't equate rising income levels, harming home-buying ability. In an article by CNBC, Doug Duncan, Fannie Mae's chief economist said, "If interest rates are rising because the economy is growing more rapidly, then, typically, incomes also rise, and the rise in incomes offset the increase in the size of the mortgage payment, and housing goes just fine." But what if income levels don't increase? After Donald Trump's presidential victory, Fortune also reported that "The increase in purchase activity was driven by borrowers seeking larger loans and that drove up the average loan amount on home purchase applications to $310 thousand, the highest in the survey, which dates back to 1990."


2. In the face of rising interest rates, loan borrowers are seeing additional credit granted. In 2015, Barack Obama's administration lowered its fees for first-time homebuyers and "the Federal Housing Administration will likely lower fees it charges first-time homebuyers" moving forward. As an added bonus, Yahoo! Finance reports that Federal Housing Administration loans come with three key benefits, including easy qualification, competitive rates, and low fees.


3. Because of the rising finances, the creation of homes is following suite, allowing for an economically feasible real estate market. Fortune reports that "average annual rate of new groundbreakings reaching a 1.163 million rate so far in 2016, up about 5% from 1.108 million in 2015". This allows for a greater selection of properties when considering purchasing that first home.


4. While large-scale metropolitan cities may contain the highest-paying jobs in the country, it's actually the medium-sized cities that provide affordable housing. This stems from a basic supply-and-demand model with the larger cities unable to keep up with new homes to meet those flocking from around the world.


5. Foreign buyers, particularly those from China, are seeking high-priced homes in large, metropolitan cities. While this trend will be least likely to directly affect you, "U.S. and Europe continue to attract growing amounts of foreign capital", which will in turn, further develop the housing market and U.S. economy as a whole.

While these trends are said to characterize the pending real estate market, Michna Law Group can help you protect your interests with its title insurance and escrow services. For more information on how we do just that, please contact us via phone at 847.446.4600 or via email at BJM@MichnaLaw.com.