Housing will pick up to its fastest pace ever in 2017. No wait, it will see a slowdown due to affordability constraints. No, that’s not right, affordability is at its best point in years.
Are you having trouble keeping up with all the forecasts for 2017, or wondering which forecast is the most accurate? It’s easy to get lost this time of year, when economist everywhere begin pouring out their forecasts for the next year.
While I won’t tell you who to believe, I can show you the difference between the experts, and where their forecasts are coming from. From there, you’re on your own.
Redfin came out on Tuesday with its prediction that homes would begin flying off the market. It had a positive outlook of the economy and said the technology in 2017 would help sell homes at the fastest pace ever. Well of course Redfin would say that. It’s an online brokerage.
But, that’s not to say their predictions aren’t without merit. This year did break the record as the fastest market on record, and many technological improvements are taking place that could improve that for next year.
And not only that, but economists are predicting a coming surge in Millennial homebuyers, who will expect a quicker online experience.
Redfin still recognized the affordability constraints, but put existing home sales at a growth of 2.8% for 2017.
On the other hand, the National Association of Realtors was much more somber in their report. Could it be because companies such as Redfin are causing real estate agents to have to lower their commission, Redfin's sixth prediction, in order to compete with the growing only brokerages?
Whatever the cause, NAR predicted an increase of just 2% in existing home sales due to affordability constraints. But these predictions are based on a consumer survey, which showed more consumers saying that now isn’t a good time to buy a home.
Less consumers said now is a good time to buy in the fourth quarter, after interest rates shot up.
And then there’s First American, who said now is still a very affordable time to buy a home, and that trend will continue in 2017. Once again, First American does have a bias to say that, it’s a mortgage company, but that doesn’t necessarily mean that the company’s predictions aren’t true.
First American looks at other factors such as inflation, wage growth, unemployment and other factors to determine what it calls the Real House Price Index. When considering all of those factors, First American found that by the end of 2017, homes will still be 34% more affordable than it was during the housing boom.
I won’t tell you who to believe, but now you can compare and contrast the different forecasts coming out for 2017. The reason for the drastically different predictions coming out for next year is simple – each company is looking at it from their own angle.