LIME REALTY GROUP is going to start another series of blogs about what to expect from 2017. These are our predictions so we hope you enjoy reading them and then checking to see if they come true or not.
The first prediction we want to make is growth will continue but slow due to affordability pressure.
With the new administration shifting the focus of the US economy and millennials, the largest generation of Americans in history, will be more relevant than baby boomers for marketers. And they will be the largest group of incoming home buyers on the scene.
Cities will continue to lead the pack with job growth and push wages up. Yet the percentage of homes in cities that are affordable on the median income has declined greatly and will continue to fall making it harder for these people to find properties to buy. A lot of homes that could come on the market right now probably won’t because the home owners are locked into rates below 4% and the rising rate will incentivize these people to stay put or rent them instead of selling. This could lead to a huge shortage of homes for sale next year.
Even with this pressure, values will continue to increase. And this growth will hold steady despite slowing sales, because homebuyer demand is so strong. However, a slow in sales could also cause builders to look for opportunities to build less expensive products. If that happens, you’ll see a lot of this millennial market snapping them up. Even then, we think the lack of affordable starter homes right now will keep sales growth weak through next year.