Trulia has released its annual 2017 Housing Outlook Report, according to a press release from the company. The Trulia survey reveals a dramatic shift in housing sentiments since the election in addition to new predictions for mortgage rates, home prices, and home inventory, as well as the top real estate markets to watch in 2017.
Election Outcome Renews Republicans, Depresses Democrats
The surprising outcome of the 2016 presidential election injected both optimism and pessimism into consumers’ expectations about the housing market in the coming year. Two surveys were conducted online among over 2,000 U.S. adults each, one before the Presidential Election (October 26-28) and one after the election (November 15-17), by Harris Poll on behalf of Trulia, key findings include:
Following the election, Republicans seemed to feel a surge of renewed positivity toward the housing market in 2017, saying it will be a better year to buy a home than in 2016, after the election, experiencing a 26 percentage point swing toward optimism compared to before the election.
Democrats turned bearish swinging from a position of optimism before the election to pessimism after; Democrats optimism around buying a home in 2017 fell 23 percentage points.
For the first time since 2011, fewer Americans viewed homeownership as a part of their American Dream, dropping to 72 percent this year from 75 percent last year. Millennials, aged 18-34, saw the biggest drop, to 72 percent from 80 percent over that same time period. However, 83 percent of these young Americans still plan on buying a home, but most won’t do so until at least the end of 2018.
Additionally, as mortgage rates have risen to nearly 4 percent since the election, renters who wish to buy generally are not concerned about rates stifling their ability to buy a home (18 percent). Instead, saving for a down payment (59 percent), having poor credit (38 percent), and rising home prices (35 percent) appear to be bigger challenges for home buyers. Moreover, though home inventory is gradually trending upwards in supply-constrained markets, equal or greater growth in demand could push home prices up.
Sunshine state dominates among housing markets to watch in 2017
Looking at the 100 largest U.S. metros, Trulia identified 10 real estate markets that are poised for growth based on strong job growth over the past year, low vacancy rates, high affordability, online home searches on Trulia, and a large share of Republican households given their optimism for housing in 2017. Based on these key metrics, Florida offers market conditions poised for growth in metro areas across the state, with Jacksonville, Fla., Cape Coral-Fort Myers, Fla., and Deltona-Daytona Beach, Fla., taking the top three spots.
The top 10 housing markets to watch in 2017 are:
- Jacksonville, FL
- Cape Coral – Fort Myers, FL
- Deltona-Daytona Beach-Ormond Beach, FL
- Grand Rapids, MI
- Tampa-St. Petersburg, FL
- Colorado Springs, CO
- Charleston, SC
- San Antonio, TX
- Phoenix, AZ
- North Port-Sarasota-Bradenton, FL
“While it’s still too soon to tell how President-Elect Trump’s surprising presidential victory will affect the housing market, Republicans are feeling a renewed sense of confidence about all things housing in 2017, while Democrats are feeling down. If these contrasts lead to noticeable changes in housing market activity, we think they’ll help close the geographic divide in home price appreciation,” said Trulia’s Chief Economist Ralph McLaughlin.
“Will mortgage rates stifle home buying in 2017? We think not. At present, mortgage rates would have to double nationally for the cost of renting to beat the cost of buying a home. Even with the recent rate hike, homeowners appear to be far more concerned about saving for a down payment, having poor credit, and rising home prices than qualifying for a mortgage,” McLaughlin said. “Gradually rising inventory in supply-constrained markets may cause homes to be more affordable, but supply is only half of the story. The combination of a healthy economy and new policies under the Trump Administration could boost demand, driving up the pace of appreciation yet again.”