Greater Reading Chamber Commerce Quarterly Summer 2017 - 19

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What's in store for the
2017 Housing Market?
Nadia Muret, Executive Director - Reading-Berks Association of REALTORS®, Inc.

n 2016, home prices nationally rose 6.2%, one of the highest
readings this decade, and are nearly back to pre-recession highs.
Mortgage rates continually slid through October to historic
lows near 3.5 percent. Compared to 2015, the U.S. Census Bureau
reports new home sales were up over 12 percent and the National
Association of Realtors reports existing home sales were up almost
6 percent.
2016 was a year of surprises so we won't pretend to know
everything that 2017 will bring, but changes are on the way. The
surprising result of the presidential election won't alter the basics
shaping the 2017 real estate market, but its impact is already being
felt as we have seen interest rates increase, a movement that's likely
to affect the youngest generation of home buyers.
Uncertainty about the next White House administration, mixed
with typical seasonal slowdowns for much of the country, could
further a lack of inventory on the market as sellers wait for a highdemand scenario.
If Trump can create clarity and some stability in the real estate
market and economy as a whole in his first six months in office,
buyers and sellers sitting on the fence will have enough confidence
to jump into the market and continue to drive values higher.

due to those increasing interest rates. Even thought, student debt is
still one of the top factors influencing whether or not the Millennial
generation will buy a home, many of those who will have saved
enough to go with something more than a condo unit or a starter
home.
Generation Z ... not that far away
With the first Gen Z-ers reaching their 18th birthdays in 2017;
according to NAR research Director Lautz, as adults, they will
experience low interest rates, better job prospects and higher wages,
and 97% of the GenZ age group wants to own a home.
Price appreciation will slow down
Nationally, home prices are forecast to slow to 4.3 % growth
year over year, from an estimated 4.9% in 2016. The predication
for 2018 is a 3.9% increase.
"Prices are still likely to go up at an above-average pace as long
as supply remains so tight," Smoke says. "The inventory problem is
not going away."
Fewer homes, fast-moving markets

According to the National Association of Realtors, the 2017
housing market will be a year of slowing, yet moderate growth, set
against the backdrop of a changing composition of home buyers
and a post-election interest rate jump that could potentially price
some first-timers out of the marketHigher pricing and higher
mortgage rates, will make it more challenging to be able to afford
homes compared to what it was over the course of the housing
market recovery. Homeownership rate is expected to stabilize at
63.5 percent after bottoming at 62.9 percent in 2016

The inventory of homes available for sale is currently down an
average of 11% year over year in the top 100 U.S. metropolitan
markets-and the conditions limiting home supply are not expected
to change in 2017. The median age of inventory, or the time it takes
a home to sell, is currently 68 days in the top 100 metros, which is
14%, or 11 days, faster than the national average.

The Median Sales Price increased 5.7 % to $148,000 and prices
continued to gain traction.

Housing Starts

Mortgage Rates

While it is unlikely we will see a continued increase of major
proportions,
buyers should be prepared to see rates in the mid-4
In Berks County
percent range during 2017. As of mid-December 2016, the National
During the first quarter of 2017, new Listings decreased 9.7% to Association of Realtors projects interest rates at 4.4 percent in the
1,207. Sales were up 6.6% to 963. Pending sales were slightly down, fourth quarter of 2017. Rising interest rates may encourage buyers
0.2% to 1267. Inventory levels shrank 26.3% to 1,641 units, a to get into the market earlier in the year.
decrease of 8.4% compared to the last quarter of 2016.

So... what are the 2017 Trends?
Millennials and boomers will move markets
In 2017, the U.S. real estate market will be in the middle of two
massive demographic waves that will power demand for at least the
next 10 years.
Millennials and baby boomers, the two largest American
generations in history, are both approaching life stages that
typically motivate people to buy a home: marriage, having children,
retirement, and becoming empty nesters.
NAR Chief economist Jonathan Smoke predicts that millennials
will make up 33% of buyers in 2017, lower than his original estimate

Formation of single-family housing is expected to increase
from around 715,000 to 800,000 units in 2016, a trend that will
continue with 850,000 and 900,000 new units expected in 2017
and 2018, respectively. While home prices are not expected to make
any major jumps, they will continue their upward trend, continuing
to cater to repeat buyers.
The overwhelming feeling about prospects in Residential Real
Estate for the immediate future is optimism. Real estate professionals
both locally and nationally, are expressing that they are as busy as
ever. There are certainly challenges in this market, like continued
low inventory and higher competition for those fewer properties,
but opportunities abound for diligent consumers.
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Table of Contents for the Digital Edition of Greater Reading Chamber Commerce Quarterly Summer 2017