At Home in Berks February 2017 - 24

ANGLES

Builders Guide

To Housing Trends
By Hallie Busta

I

f 2016 saw the pace of the homebuilding industry's protracted recovery pick up slightly, 2017
could see a more concerted spring forward. That's
due to rising (but still low) mortgage rates, continual gains in new construction activity and a bevy of
first-time buyers waiting for the price (and product) to be right for their shot at homeownership.

In its 2017 Housing Forecast, Realtor.com set similar expectations, calling for home-price appreciation to decelerate from 4.9%
in 2016 to 3.9% in 2017, with 46 of the 100-largest U.S. metros
seeing depreciation of at least 1%. Metros with the most significant forecasted gains are predominately in the West and South
regions, while the Midwest, Mid-Atlantic and New England
should see milder increases.

"The housing market is relatively tight right now and is expected to loosen somewhat in 2017," Andres Carbacho-Burgos, a director at Moody's Analytics, said. That loosening is
imperative for affordability - a current weight on recovery.
Below, we explore how price growth, inventory conditions,
buyer demographics and design trends will shape the 2017
spring and summer buying seasons.

Home price growth will ease this year
Home-price gains will continue into 2017 but should taper
slightly as more inventory comes online and interest rates
tick up.
"We expect house-price growth to be significant in the
coming year - around 4% to 5% - but for 2018 and 2019
to be significantly lower because of high interest rates," Carbacho-Burgos said.
Currently, the median U.S. family has around 170% of the
income needed to qualify for a standard mortgage on a median priced home, Carbacho-Burgos said. That figure, while
solid, is expected to drop to 160% by 2019 as rates increase
from historical lows. The effect is likely to be reduced housing
demand and slowing home-price growth.

24

AT HOME IN BERKs FEBRUARY 2017

Supply-side headwinds will extend
project timelines
A tight labor supply, more regulations and increased lot costs
in many markets are putting pressure on prices and delivery
schedules. "Builders seem to have accepted that it now takes
longer to build a home," said Jody Kahn, senior vice president at
John Burns Real Estate Consulting. That has builders cautious
about building on presale, causing them to take homes well into


http://www.Realtor.com

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