Housing experts surveyed by Zillow expect home-price appreciation to slow to an annual rate of 3% by October 2017, compared to typical year-over-year increases of more than 5% in major U.S. cities and nationally.
In a report this week, the real estate listing website noted that the median U.S. home value climbed 6.2% from October 2015 to $191,200 in October 2016. Meanwhile, rents rose a modest 1.4% during the period while inventory fell 6%. Boston, Indianapolis and Kansas City, MO, saw the biggest drop in housing stock during the month.
- Portland, OR, Dallas and Seattle recorded the largest year-over-year home price increases among the top U.S. metros for the third-straight month. Seattle and Portland also led in rent increases for the period, followed by Sacramento.
What’s been a seller’s market should soon favor buyers – and, by extension, builders. In a report this week, Realtor.com echoed suggestions that home-price appreciation should slow in the coming year, with markets that have seen the most dramatic price increases adding inventory and, therefore, leading prices to soften.
The sudden increase in mortgage rates (albeit to still-low levels) following the election has some industry watchers pulling back on their optimism around projections of continued increases in the share of first-time homebuyers until the market readjusts, as expected.
Meanwhile, millennials, who are primarily first-time buyers, are looking away from the tight, pricey East and West coasts and to the Midwest for housing they can afford. In its report, Realtor.com noted that millennials accounted for 42% of homebuyers in the region, on average, compared to 38% nationally. Active markets include Madison, WI; Columbus, OH; Omaha, NE; Des Moines, IA; and Minneapolis.
"There is a huge disparity in how many dollars are needed to get a home in Des Moines versus San Francisco," Realtor.com Chief Economist Jonathan Smoke told Construction Dive. "Affordability is a key part of why millennials are deciding to move or stay where they have been, as opposed to staying where they are."
The shift matches a recent analysis by Builder magazine of the disparity between median incomes in a given market and the salary needed to afford a home there. The publication found that cities including Cleveland, Minneapolis, Detroit and Baltimore offer lower-priced housing that is affordable to median incomes there.
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