My Annual 10 Real Estate Predictions For The New Year

This coming year is the most difficult I have had to predict, in large part because of a presidential election that was unpredictable, resulting in a new president who is anything BUT predictable. That’s not a partisan comment, by the way. Who among us can honestly say they can predict what our new president will say or do?

Despite that uncertainty…Here are my Annual Real Estate Predictions for the Upcoming Year:

1. Interest rates will be on the rise this year and inch up to 5% by year end. I was wrong on this one in 2016, but who wasn't?

2. Home prices are at nearly the pre-recession peak, but are apt to cool off. They're already doing so as homes aren't selling at the rate they were in 2015. The near double-digit gains of that year are gone, but that's actually good for the health of the overall market. 2017 should bring a more normalized housing market -- one that still boasts a healthy number of sales but a moderate rate of price growth.

3. Expect homebuilding to continue at a steady pace this year. It is projected to rise by 20 percent from last year, filling a continuing demand for brand new homes.

4. Expect many builders to shift to less expensive homes and condominiums, providing new construction to a larger pool of buyers and, as a result, more and faster sales.

5. Foreign investors will still find high-end American real estate appealing because of economic turbulence in their home countries. That section of the market is still primarily all cash – people buying up expensive properties because it's a safer investment here than in their own countries.

6. Mortgage originations of single-family homes will remain steady as the interest rates still remain low and are not expected to rise dramatically (see #1 above).

7. 2017 will be a great year for first-time homebuyers. With rents continuing to rise faster than incomes, many Millennials are expected to start looking to buy homes of their own.

8. Baby boomers are also likely to make a move in 2017. Many are downsizing, and moving to be closer to their children or grandkids.

9. On the commercial side, expect multifamily and industrial properties, two strong sectors in 2016, to remain so again in 2017. While speculative construction of big industrial space has returned, the problem is that there's only so much land where more can be built. Even so, the cost to own buildings compares favorably to leasing in many situations.

10. Overall, improving economic factors will provide more people the needed income to buy. The new President has promised job growth. Job growth creates housing growth. Housing growth means prospective buyers will be able to ditch renting in favor of buying a house for the first time in 2017.

All in all, it should be a good year, dependent upon the actions of the new administration. (Did I mention that predictions are especially difficult this year?)

Best wishes,

Jay

Jay Burnham is a Premier Associate at Coldwell Banker Residential Brokerage in Beverly. He is a past president of the North Shore Association of REALTORS and was previously the Association’s REALTOR of the Year. He has been a real estate broker for 35 years and has sold more than $300 million of residential and commercial real estate. He lives in Hamilton with his wife and business partner, Linda Morey, also a Coldwell Banker Premier Associate. Contact them for your real estate needs or questions. Online at www.NorthShoreRealEstate.com, or call their direct line at: 978-233-2828.