With every new year, there are changes to the fluctuating real estate market. Though market predictions are never an exact science, there are always trends that can be expected to shape the market. In 2017, we hope to see a continuation of the defining trends of 2016, but with some exciting changes. Here are five trends that we expect to see impact the Rhode Island real estate market this year:
There Will Be More Buyers
This will be a great year for finding homebuyers. Millennials are finally entering the housing market as a result of an influx of new jobs and wage increases for 26-34-year-olds. Millennials are also reaching the age where they are ready to begin settling down and starting families. Boomers will also be active in 2017. The oldest Boomers are looking to make some moves right before they enter retirement. Some will be looking to downsize to manage their expenses, while others will be looking to expand their homes because their families have grown. In both cases, you can expect to see a boom of buyers in the Rhode Island area.
Home Values Will Continue To Increase
In 2016, home values rose 4-8%. Home values will pursue this growth in 2017, but at a slower growth rate. Most experts predict that home values will increase between 3-6% in 2017. Though more gradual increase than last year may lead to less exciting profits, it is an excellent thing. Lower values are a signal the real estate market is normalizing and may be finally recovering after the housing market crash. So we can also expect the real estate market will be much more stable in the coming years.
Buyers Will Return To The Suburbs
Between the housing market crash and the increase of gas prices, many buyers opted to move closer to the city center for better access and more affordable commutes. A major side effect of this trend has been the suburban housing prices have reduced, so buyers looking for something more affordable can once again look outside the city. Also, with the housing market recovering and gas prices once again affordable, suburban living is becoming really attractive for the middle-income homebuyer.
New Construction Will Be More Expensive
Building a new home has always been more expensive than buying a home, but this year those costs may be even higher. After the housing market crash, the demand fell, and many construction workers had to find new employment, leading to a reduction in labor. Furthermore, with the potential of new policies toward immigrants who make up a sizable portion of construction workers, there may be even more reduction in labor. With a labor shortage, construction companies will have to increase salaries. Those costs will be passed on to the homebuyer.
Mortgage Rates Will Increase
Since the housing market crash nearly a decade ago, mortgage rates have been at record lows. However, these rates have been slowly rising again. In 2017 the Federal Reserve will increase rates three more times to reach its recovery benchmarks. That means that buyers should try to purchase homes earlier in the year rather than later to take advantage of lower mortgage rates. These five trends will have a huge impact for buyers, sellers, and real estate agents. So make sure you include them in your real estate strategy for 2017. With prices still increasing, more buyers entering the market, and the return of suburban living, 2017 will for sure be an exciting year!