What to Expect from the Real Estate Market in 2017
How to take advantage
of Silicon Valley Real Estate Market in 2017
Another year is winding down and it’s time to reflect on the Bay Area real estate market over the past 12 months and see how it can help forecast the upcoming year.
Heading into 2016, most indicators pointed to the continuation of a hot real estate market that would favor Silicon Valley home sellers. The local economy was strong, unemployment was below 4%, and the number of homes available for sale remained low, which meant prices would continue to rise.
Despite the many signs, 2016 proved to be only warm. This year, only 2 months posted year-over-year price increases of more than 5%. From 2012 through 2015, 46 of 48 months increased more than 5% and 35 of those months were over 10%.
Another area that cooled off was the price-to-list ratio. In 2015, 6 months had a ratio higher than 105%. This year, only one month exceeded 105%. Overall home inventory in 2016 was 3.5% higher than 2015, but unit sales were 7% lower. Usually, more inventory leads to more sales, not less. These data points show that 2016 proved to be a transitional year toward a more balanced real estate market. Buyers gained more leverage and sellers had to settle for moderate price appreciation.
It is more than likely that 2017 will continue the trend towards the same type of market where buyers will continue to focus more on value than availability and sellers will grow to accept slow price appreciation as the new norm.
Things to monitor in 2017 are interest rates and lending practices. Higher rates might temper sales, but easier lending procedures might offset it.
Last but not least, who are the buyers that are expected to rule the real estate market in 2017?
According to Realtor.com, Millennials and Baby Boomers are the two demographics expected to fuel demand for at least the next decade in the housing market. Although most real estate professionals lowered their prediction of the millennial market share to about 30% due to recent increases in mortgage rates, Baby Boomers are expected to make up the difference and may represent up to 30% of buyers next year.
Best wishes to you and your loved ones for 2017!