Reality Check: Which Early 2017 Forbes Anticipated Trends Were a Must, and Which Ones Were a Bust
The 2017 Housing Market Was Nothing if Not Fickle
Trying to accurately predict what the housing market is going to do over the span of 12 months is something that experts have attempted to do for years, but the reality rarely meets the expectations or the predictions. Despite the fluidity of the market, at the start of every year, Forbes issues its most anticipated trends – and this year was no different.
So, how on-target were Forbes‘ predictions? Here are the 2017 trends that proved to be spot on and the ones that were a bust.
#1: Prices Will Rise, But Slowly
This prediction has largely come true, with the median home price rising every month of 2017 until it hit its peak in June at $275,000. This marked a 10% increase in price over the same time last year. In September and October, the median home price dropped by $1,000 so that trend may be coming to a close as the year finishes out.
#2: Affordability Will Decline
This is another prediction that rings true through most of 2017. The Composite Housing Affordability Index saw a steady drop in affordability through the mid-point of October, but then the affordability index indicated a slight increase by the end of the month. The remainder of the year will prove whether that increase was just a blip on the radar or if the trend is reversing itself.
#3: Mortgage Rates Will Be Volatile
This prediction turned out to be true. After the election of Donald Trump, the market experienced an interest rate above 4% for the first time in two years. And, every month since he took office, the rates have been up and down, despite being in a decline when looked at as a whole. The rates hit their lowest of the year in September, at 3.78% for a 30-year fixed loan and since then, the rates have slowly but steadily been on an upward trajectory.
#4: Credit Availability Will Improve
The Mortgage Credit Availability Index has been on a steady rise since January 2017 with just a few downward hiccups along the way. This is something that Forbes was able to successfully predict. In August, the MCAI hit 180.2, a 0.7% increase from July, resulting in more lenient lending requirements for borrowers with less than perfect credit.
#5: Supply Will Increase, But Not by a Lot
Thus far is 2017, this prediction has been a bit of a miss, in part due to the fact that hurricanes ravaged a significant portion of the south. In fact, in the second quarter, the unsold inventory accounted for just 1.9% of all households in the country, which is the lowest second quarter reading in the last 30 years.
Finally, in September, the supply finally started to increase after three straight months of decline. How the housing supply will finish out the year is currently anyone’s guess.
#6: More Millennials Will Become Homeowners and Renters
This prediction is a bit of a no-brainer as millennials are fast becoming one of the leading population groups fueling the housing market. But between the two housing options, more millennials are sticking with renting than buying, and likely for a few specific reasons:
- Real estate is expensive in close proximity to employment centers
- Starter homes are being scooped up by older generations
- Overall slowing of available American jobs since the start of the year
- Greater convenience and flexibility and fewer responsibilities
#7: Buyer Competition Will Be Fierce
This prediction is based on the slow increase in housing stock because when there’s less to pick from, buyers are of course going to be more competitive. But, buyers weren’t exactly breaking down the doors in the first part of the year.
The numbers of sales were slightly up, but investors made up a percentage of the data. However, as investors starting bowing out around the middle of the year, things finally started opening up for first-time buyers. With the end of the year upon us, sellers will be more motivated to sell, making it an ideal breeding ground for buyers looking for a deal.
#8: Political Uncertainty Will Be Followed by Policy Uncertainty
Any time a new president is elected it can cause a ripple effect through the housing market and this year was no different. The 2017 administration however, caused much more of a turmoil due to numerous factors, including uncertain policy-making processes, stalemates in party decision-making, perceived inexperienced leadership of HUD, a lack of distinct housing policy in campaign stumping, and a real estate developers’ view of the residential real estate market.
Because of this, real estate experts had no real idea what the 2017 presidency had in mind for the housing market’s stimulation, consolidation or legislation.
From a purely subjective point of view, we’d have to say that Forbes hit this prediction out of the park.