What will 2017 bring?
In a few days, we will be ringing out 2016 and ringing in 2017, a year that promises to be one of the more interesting in recent decades. But how will the real estate market fair during 2017? As usual, all of the experts who profess to be wicked smart in this area have an opinion and so do I.
In November, Realtor.com did its 2017 National Housing Forecast. Some of what was in its report predicts that the housing market will be slowing in the new year with moderate growth because of higher interest rates and first time buyers dropping out of the market. Home prices are anticipated to increase 3.9 percent and existing home sales are forecasted to increase 1.9 percent. Interest rates are expected to reach 4.5 percent, and, of course, its prediction may be proving correct since the Federal Reserve did increase the prime rate two weeks ago, indicating more increases in the new year.
Realtor.com is forecasting the homeownership rate will stabilize at 63.5 percent after reaching the bottom of 62.9 percent. In addition, it predicts that millennials and baby boomers will dominate the market, probably for the next 10 years.
Agreeing with Realtor.com is Nela Richardson, chief economist for Redfin. She agrees that real estate sales prices are decelerating, and the market normalizing. Redfin feels that home price appreciation will probably be between 3 to 4 percent. And as far as purchasing now, everyone agrees it’s a good time as long as you’re looking at a long-term investment. If you are counting on your home value going up by 20 or 30 percent in the next three years, you will probably need to rethink that.
However, Fortune and the National Association of Realtors are saying the coastal real estate markets are getting a major boost as the national housing market improves. Specifically, in Florida statewide prices are up 11.7 percent for single family homes to a median sale price of $220,000 according to Florida Realtors. Coastal markets in particular in Florida are seeing steady and improved sales and increased values.
For example, Key West has seen a 71 percent increase since last year in the median sale price to $769,500 for a single-family home, and a 33.1 percent increase from five years ago. Even the lower keys are seeing a 47.5 percent increase this year with the median sale price at $660,000 for single-family homes. Also in Florida’s Panhandle in Fort Walton Beach and Destin, their median sale price has increased 15.7 percent since last year for single-family homes. Finally, Miami, Ft. Lauderdale and West Palm Beach also are seeing a significant increase in the median sale price of 11.7 percent. This is a great turn around for this region that again is attracting international buyers.
With all of this coastal real estate good news, Anna Maria Island and the coastal areas of Manatee County are right on their heels, improving in increased appreciation and improving sales with every season that passes. October’s median sale prices in Manatee County are up for both single-family homes and condos at 8 percent and 2.5 percent, respectively.
Wicked smart economists notwithstanding, my opinion goes back to my column from two weeks ago – “All real estate is local.” You can crunch numbers and analyze all you want from the safety of a mahogany desk in Washington, but until you get on the ground in local communities, you don’t know a thing. So, take that opinion into the new year and get ready for a whooper. Happy New Year.