Have you payed attention to the 2017 real estate market forecast?
According to the 2017 Housing Forecast mapped out by realtor.com, both homeowners and investors can expect housing activity to temper. That’s not to say that there won’t be growth — there will be — but rather that the growth we do experience will be more moderate. As noted by the 2017 National Housing Forecast, “Home prices are anticipated to increase 3.9 percent and existing home sales are forecasted to increase 1.9 percent to 5.46 million homes. Interest rates are expected to reach 4.5 percent due to higher expectations for inflationary pressure in the year ahead.”
For all intents and purposes, the reduced rate of growth isn’t an indictment on the health of the real estate sector, but rather a return to a more sustainable rate; one that is more or less normal. But I digress, most people are aware of the alleged cool down; it’s the other predictions I remain excited about. To be honest, spring housing market trends will be very telling this upcoming year. There are a number of exciting indicators related to the 2017 real estate market forecast. In particular, millennial buyers are projected to make up the largest buyer pool in the coming year.
Those investors that can not only listen to what the market has to say about millennials, but also interpret the information in a way that caters to their business, will be in a great position to take advantage of potential trends. Let’s take a look at what realtor.com expects to happen in the coming year, and — perhaps even more importantly — uncover what the 2017 real estate market forecast means for investors.
According to the 2017 National Housing Forecast, millennials and baby boomers are fully expected to constitute the majority of housing market participants in the coming year. Research suggests that millennials will represent the largest share of buyers at 33 percent, a market ratio that has actually been lowered due, largely in part, to the impending interest rate hike. Baby boomers, on the other hand, shouldn’t be far behind, as industry pundits are confident that those on the brink of retirement should represent somewhere in the neighborhood of 30 percent of 2017’s buyers. If for nothing else, a large majority of baby boomers should look to downsize their living accommodations in the near future.
Real estate is a numbers game; the more leads, the better. That said, real estate investors should pay special consideration to the largest buyer pool they are likely to encounter in 2017: millennials. Provided millennials show up in the numbers we fully expect, it should be in the best interest of investors to tailor their marketing efforts towards younger buyers. All things considered, it might be worthwhile for investors to consider an exit strategy that meets the needs of millennials. Don’t neglect the fact that millennials should represent the largest pool of buyers, but rather embrace it. And don’t hesitate to target properties that appeal to first time buyers, as you may find yourself sitting on an asset with inherent demand built into it.
I maintain that there is a lot to glean from the numbers in the 2017 housing forecast, but none may be more important than the idea of who will make up the largest buyer pool. Knowing full well that both millennials and baby boomers are expected to show up in full force, now is the time to adjust your business strategy accordingly. If you want to play the numbers game, I recommend focusing your efforts on those assets that are more attractive to younger, first-time buyers: smaller homes, urban communities, lower prices and even access to transportation. Millennial buyers have a tendency favor certain homes over others; find out what they are and tailor your business strategy to meet their needs. In doing so you will be able to draw upon what is expected to be the largest buyer pool of 2017.
I maintain that knowing which types of properties to invest in to take advantage of millennial buyers can award real estate entrepreneurs with a significant advantage. However, it’s equally important to know which market to invest in as well. Fortunately, the 2017 housing market forecast has identified the best cities investors might want to consider when catering to millennial buyers.
Not surprisingly, Midwest cities remain at the top of millennials’ wish lists. “Midwestern cities are anticipated to continue to beat the national average in millennial purchase market share in 2017 with Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, leading the pack,” said the report. “This year, average millennial market share in these markets is 42 percent, far higher than the U.S. average of 38 percent.”
Savvy investors are advised to take note of which assets are in the highest demand, end even which locations will facilitate the sale of said assets. And as some of the most recent forecasts would lead us to believe, millennials will once again make up the larger population of buyers. Armed with this knowledge, there is no reason you shouldn’t be able to devise a business strategy to take advantage of the most likely trend of 2017.
As we prepare to turn the page on 2016, it only makes sense to adjust our investment strategy accordingly. Take heed of the trends that are expected to take place in 2017, and be sure to capitalize on what they have to offer. Those investors that want to place the odds in their favor may want to consider catering to the largest buyer pool in the country. All things considered, investing in the assets millennials covet and where they prefer to reside will pay dividends more often than not. Provided millennials turn out in the numbers the 2017 real estate market forecast predicts, you may find yourself way ahead of the game.