As 2016 gives way to 2017, we move away from recapping the year that was and transition to prognosticating the year to come.
Recently, RealtyTrac's Housing News Report gathered seven economists to take a look at the 2017 economic outlook for real estate. Freddie Mac Vice President and Chief Economist Sean Becketti provided insight on a number of topics, including the most important housing market trend of 2017.
"Homebuyer affordability challenges (combination of higher mortgage rates and higher home prices) will be the biggest single challenge facing housing markets in 2017. For the past two years, interest rates have trended down, helping to boost homebuyer affordability," said Becketti. "While we don't forecast interest rates to rise rapidly, we do expect them to gradually drift higher most of next year. We also expect that house prices will rise, but at a more moderate pace than this year."
Becketti also discussed the outlook for existing home ("Sales down. Prices Up.") and new homes ("Sales Up. Price Up."). He also said that he expects mortgage interests rates to continue to trend upward in 2017.
Finally, Becketti discussed how the new presidential administration will impact the U.S. residential real estate market.
"Markets appear to believe that the [new Administration's] proposals, in whatever form they are finally enacted, will generate a moderate increase in both growth and inflation, and we agree with that consensus," he said. "However, even before the U.S. presidential election, mortgage originations had begun to cool as interest rates stabilized after the post–Brexit rally. The recent Treasury sell–off raises the possibility that the 40–year secular decline in mortgage rates may finally be at an end. If that turns out to be the case, originations will drop sharply, refinances will dry up, durations will extend, and home sales activity will grind lower."
For more insights from Becketti and the other economists, read the January 2017 Housing News Report newsletter.