The world of real estate changes pretty regularly and for a variety of reasons. For anyone with an interest in real estate, and in particular for investors, keeping an eye on emerging real estate trends is very important. You can learn a lot about the market by keeping up with emerging trends, and for investors this can help them to make key decision with regards to their investments.
As is the case every year, 2017 has already seen a number of emerging trends within the real estate market. Lately, as a result of the real estate bubble, lending has remained strict and building companies have been erring on the side of caution when it comes to new developments. However, experts believe that there could be some major changes on the way over the course of this year, so let’s take a look at some of the emerging real estate trends for 2017.
Some of the trends may affect the real estate market this year
Experts have already commented on a number of key trends that are likely to affect the real estate market this year. As an investor or someone who has an interest in the real estate market, you will benefit from keeping an eye on these trends. Some of the trends highlighted so far for this year include:
- Interest rate increases: In December of last year, interest rates were increased be the Federal Reserve for only the second time in a decade. At the time, most members of the Federal Reserve’s rate-setting board predicted that 2017 would see a number of further increases. In fact, the majority believe that this year will see another three rate increases, which will equate to higher mortgage rates and could lead to reduced property sales as a result. However, experts have said that while interest rates are expected to rise, it won’t be by a significant amount and will still be much lower than historical norms.
- Availability of credit: The availability of credit has been tight of late due to the real estate bubble. However, experts believe that mortgage lending standards will become more relaxed, which means credit will become more freely available. In addition, fees could be decreased for first time buyers. This means first time purchasers could benefit from a helping hand onto the property ladder. This could help to off-set any reduction in property sales stemming from higher mortgage rates, as investors and buyers will be able to get the funding they need to purchase property more easily.
- An increase in new homes: As mentioned earlier, building and construction companies have been cautious about delving back into the property development market full pelt because of the issues stemming from the real estate bubble. However, this year experts expect to see an increase in property development and a rise in the number of new homes available. According to reports, factors such as higher wages, greater availability of credit and increased demand for property will encourage building and construction firms to increase activity this year.
- Increased demand for affordable properties in medium sized cities: While many people are attracted to property in big cities due to the amenities, job opportunities, and facilities, the cost of purchasing property in many of these places is too high for them. Many are therefore focusing on medium sizes cities, where they can still benefit from access to jobs, amenities and facilities, but can also enjoy more affordable house prices. This is a trend that has already emerged and is set to continue over the course of the year. It could therefore result in more properties being built in smaller cities.
- Continued interest from foreign investors: Many may have been concerned about the effects of the Trump residency on foreign investment. However, data has shown that interest from foreign investors in the real estate market is still going strong and is expected to continue this year. Marked increases in foreign investment have been noted lately, particularly from property investors from China. This is a trend that is driving property prices upwards in places such as Los Angeles and New York, which are both popular destinations amongst foreign property investors.
- More property purchases by millennials: Experts are predicting that millennials will be amongst the main group when it comes to purchasing property in 2017. The oldest in this group will be moving into their mid-thirties this year, and many will be looking to settle into their own homes according to industry officials. Other factors affecting this trend include rising wages for people between 25 and 34 years of age as well as increased job opportunities for people in this age group. This means that more millennials will find themselves in a position where they can afford to get onto the property ladder.
- Property values are set to increase: Another trend that is likely to affect the real estate market this year is an increase in property values. Experts believe that property values will increase over the course of this year. However, the increases are expected to be slower than those seen last year. One industry official said that property prices will probably increase by around 3.6 percent this year compared to 4.8 in 2016.
Keeping up with the trends
If you are planning to invest in property this year, whether it is as a home buyer or to purchase an investment property, you should keep your eye on these emerging trends. These can help you to make more informed decisions when it comes to property purchase and investment. Of course, trends may develop and change over the course of the year, as nothing is set in stone.
Those looking to rent a property this year should also keep an eye on the market. At present, experts are predicting that rental prices will become more affordable over the course of this year, which is good news for renters. However, this will depend on the location you are looking to rent property in amongst other things.