5 Housing Markets Where Home Prices Could Outpace the Nation in 2018

Recent housing market forecasts suggest that home prices nationwide will continue rising over the next 12 months, at least in most parts of the country. But the gains will probably be smaller than those recorded over the last 12 months. As for high performers, the five cities below could outpace the nation in terms of year-over-year price growth through 2018.

5 Housing Markets With Above-Average Forecasts: 2017 – 2018

According to the real estate analysts and economists at Zillow, home prices in the U.S. are expected to rise by around 2.6% over the next 12 months, extending into April 2018.

But some cities could see larger gains as a result of strong demand and a limited supply of homes. Here are five housing markets that are forecast to outpace the nation over the next year, where house values are concerned.

Bridgeport, Connecticut: 5.2%

Starting in the Northeast, we have the real estate market of Bridgeport, Connecticut. Bridgeport is expected to see above-average price increases into the first part of 2018.

The median home value in this relatively affordable housing market was $165,200, as of April 2017, after a gain of around 10% over the last year. Zillow’s economists expect prices to rise by more than 5% over the next 12 months, nearly double the national outlook for the same period.

Dallas, Texas: 5.8%

According to a recent article on DallasNews.com: “All but five of the 45 Dallas-area residential districts that The Dallas Morning News tracks each quarter had home sales price hikes [over the last year], according to data from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.”

When looking at the first quarter of 2017 compared to the same period last year, the biggest home-price gains occurred in DeSoto (25%), Lancaster (22%), southern Dallas (22%) and the Park Cities (22%).

Across the city as a whole, Zillow reported a 15.4% increase in median home prices over the last year, and predicts the housing market will appreciate by nearly 6% over the next year.

Sacramento, California: 5.4%

Earlier this year, Zillow published a list of what it felt would be the ten hottest housing markets of 2017, in terms of price growth. Sacramento, California was ranked #10 on their list, out of the 100 largest metro areas in the country.

According to the company’s research team, home prices within the Sacramento housing market rose by 11.3% over the last year, and are expected t0 climb by another 5.4% over the next 12 months.

Seattle, Washington: 5.1%

The Seattle housing market has generated a slew of headlines over the last couple of years, mainly due to the high level of competition among home buyers. (It was also ranked in the #2 spot, on the list of “hottest markets” mentioned above.) Housing inventory is tight in Seattle, while demand continues to grow from population growth.

According to Zillow, home prices in the city rose by 12.2% over the last 12 months. Looking forward, the company has forecast a gain of 5.1% between now and April 2018.

Tampa, Florida: 4.5%

Home prices in the hot Tampa, Florida housing market rose by a whopping 15% over the last 12 months, according to the team at Zillow. To put that in perspective, historically “normal” appreciation is somewhere around 3% annually. So the Tampa housing market has experienced some seriously above-average price gains in recent months.

Going forward, Zillow expects home value appreciation to slow considerably. They’ve predicted that the median price for houses in Tampa will rise by 4.5% from April 2017 to April 2018. While that does signal a cooling trend, it’s still higher than the company’s national outlook (for a 2.6% price gain over the next 12 months). So the Tampa real estate market deserves a spot on our list of high performers.

Disclaimer: This story contains housing market forecasts and home-price projections that were provided by third parties not associated with our company. The Home Buying Institute makes no claims, assertions or guarantees about future real estate tends.

10 Housing Markets Where Inventory Is Way Down in 2017

A recent report from Trulia revealed that the number of homes for sale in the U.S. has dropped significantly over the last five years. During the first three months of 2017, inventory nationwide dropped to its lowest level on record.

Housing markets like Salt Lake City, Seattle, San Diego, and Nashville are really feeling the crunch, with inventory dropping by more than 60% since 2012.

Low Inventory Makes Home Buying ‘Season’ More Competitive

In March, the real estate information company Trulia published a report on housing supply in America. Specifically, they looked at the supply of homes listed for sale across the country, and also in the 100 largest metropolitan areas.

Their analysis revealed that the housing markets with the biggest increases in home prices have also experienced significant reductions in the supply of homes for sale. Buyers in these cities and metro areas face stiff competition and often have a harder time finding properties, due to a dearth of inventory.

According to Trulia’s analysis, the number of homes on the market nationwide dropped again during the first quarter of 2017, marking eight consecutive quarters of declining inventory. Starter homes (at the bottom of the pricing spectrum) fell the most, with a decline of 8.7% over the last year alone. The supply of higher-end or “premium” homes was more stable by comparison, with a decline of just 1.7% over the past year.

Related: Home price forecast for 2017

Shrinkage: 10 Cities Where Supply Is Way Down

Here are the ten U.S. housing markets with the largest decreases in for-sale inventory since 2012. The percentage beside each city shows how the number of homes for sale has changed over the last five years.

  1. Salt Lake City, Utah: -69.5%
  2. Seattle, Washington: -66.6%
  3. San Diego, California: -66.5%
  4. Nashville, Tennessee: -66.0%
  5. San Jose, California: -63.5%
  6. Colorado Springs, Colorado: -62.1%
  7. San Francisco, California: -62.0%
  8. Cambridge, Massachusetts: -61.9%
  9. Grand Rapids, Michigan: -61.9%
  10. Tacoma, Washington: -61.6%

Home buyers in these ten housing markets are facing increased competition due to limited supply. The housing inventory crunch in these markets has also boosted home prices. In many of these cities, house values have risen above the peak levels seen during the last housing boom.

According to a related press release: “A strong recovery may be partly to blame for the large drop in inventory some markets have experienced over the past five years. Housing markets — including San Francisco, Seattle, Nashville, and Colorado Springs — which have had greater home value recovery since 2012 have experienced larger decreases in inventory.”

Home prices in Seattle, for example, are currently 12% higher than they were during the housing boom of the early to mid 2000s. In Nashville, another hot housing market with limited inventory, prices are 20% higher than their pre-recession peak.

San Francisco, which has been called one of the most overvalued housing markets in the country, has rebounded even further. Home prices there are about 32% higher than the last peak, according to Trulia’s report.

How to Succeed in a Tight Housing Market

Home buyers in these ten housing markets — and other cities with limited inventory — need to bring their ‘A’ games when entering the market. Competition is high, and supply is low. This is especially true in the “starter home” price range, which is where most first-time home buyers tend to shop.

Here are some tips for succeeding in a housing market with limited inventory:

1. Get a real estate agent. An experienced agent can help you move quickly when the right property comes along, by making a sound offer based on current market conditions. Making a reasonable offer is always important, but even more so in a housing market with limited inventory and stiff competition among buyers.

2. Don’t sweat the small stuff. Going back and forth with a seller over minor inspection issues — or small difference between the asking and purchase price — could put the entire deal in jeopardy. This is especially true in a hot housing market with limited inventory, like the ones listed above. So be flexible. Keep the big picture in mind. Don’t sweat the small stuff. There’s probably another eager buyer right behind you, or several of them.

3. Remember who holds the cards. This an extension of tip #2 above. In a tight housing market, with limited supply and high competition, sellers have most of the bargaining power. That’s real estate reality. Ask for too many concessions from the seller, like a contribution toward your closing costs, and they might skip your offer in favor of the next one. Home buyers should be careful what they ask for in a sellers’ market.

Forecast: Phoenix Home Prices to Keep Rising Into 2018

According to a recent forecast from the real estate data company Zillow, the Phoenix housing market could continue appreciating well into the first part of 2018.

But homeowners in the areas probably shouldn’t expect the kind of home-price appreciation seen over the last year. House values in the Phoenix appear to be rising more slowly in 2017 than they did in 2016.

Phoenix Housing Forecast: Prices Rising Through March 2018

As of March 2017, the median home price in Phoenix, Arizona was just over $200,000 — and rising. The housing economists at Zillow predicted in March that the median home price in Phoenix would rise by 3.5% over the next 12 months (through March 2018). That’s roughly equivalent to the national average for annual housing appreciation going back decades.

As Zillow stated in March: “Phoenix home values have gone up 9.4% over the past year and Zillow predicts they will rise 3.5% within the next year.”

Phoenix homeowners might consider this relatively low forecast a negative sign, but it’s actually a positive. Above-average price increases are generally not sustainable over the long term, especially when they far exceed wage and income growth. Under such conditions, housing markets become unaffordable to an increasing number of residents.

An ‘Overheated’ Real Estate Market?

A February 2017 report by Fitch Ratings suggested that the Phoenix real estate market was “overheated.” According to the report: “home price growth in parts of the western U.S. … is exceeding supporting economic fundamentals. Of particular focus for Fitch are home prices in major metro areas like Dallas, Las Vegas, Phoenix and Portland, which are overpriced by 10% – 14%.”

Related: Marketing for Phoenix real estate agents

Granted, Phoenix is still relatively affordable compared to a lot of other big cities across the country. In fact, the city was recently ranked #7 on a top-ten list of most affordable big cities for U.S. home buyers, by the mortgage information website HSH.com.

Still, the more moderate forecast for Phoenix’s housing market, extending through 2017 and into 2018, is a good sign. It suggests a return to normalcy after years of tumultuous fluctuations. It’s a more sustainable pace for home-price appreciation.

Study: Buyers Need $46,000 to Afford a Median-Priced Home

According to HSH.com, buyers would need to earn around $46,000 per year to afford a median-priced home in Phoenix, Arizona. That’s with a down payment of 20%. If a home buyer puts down 10%, the salary needed to buy a home would increase to around $54,000.

Like home prices, mortgage rates have also risen over the last year or so. On March 9, 2017, Freddie Mac reported that the average rate for a 30-year fixed-rate mortgage loan was 4.21%. That’s up from 3.68% the same time last year. So Phoenix home buyers are currently paying more for houses and for mortgage loans, compared to a year ago.

The bottom line: Forecasts for the Phoenix real estate market suggest that home prices will continue rising throughout 2017 and into the first part of 2018, but at a slower pace compared to last year. According to some economists, this is a much-needed change that could prevent the Phoenix housing market from becoming too “overheated.”

Disclaimer: This story includes housing market and home price forecasts for Phoenix, Arizona, through 2017 and into 2018. These forward-looking statements were provided by third parties not associated with our company. The Home Buying Institute (HBI) makes no claims or assertions regarding future housing conditions.

U.S. Home Price Forecast for 2017: A Return to Normalcy?

A recent forecast for U.S. home prices suggests that house values will rise more slowly in 2017, more closely matching historical averages. This follows a period of above-average gains over the last two years.

According to the real estate research team at Zillow, U.S. home prices rose by nearly 7% in 2016. That’s well above the historical average of 3% to 4% per year, over the last couple of decades.

Portland, Seattle, Dallas and Tampa led the nation in 2016, in terms of home-price increases. According to a January 19, 2017 press release from Zillow:

“Home value appreciation slowed slightly in Portland, but remains the fastest in the nation, up 13.8 percent from last December. Tampa, Seattle and Dallas saw similarly high home value growth, with home values growing nearly 12 percent from a year ago.”

U.S. Home Price Forecast for 2017: Smaller Gains Ahead?

But we probably shouldn’t expect to see such big gains in 2017. The company’s economists have forecast that U.S. home prices will rise by around 3.5% in 2017, which is on par with historical averages.

Call it a much-needed return to normalcy. In many U.S. cities, home-price gains over the last few years have outpaced wage and income growth by a wide margin. This kind of trend leads to housing affordability issues over time. California is a good example of this, though such conditions are certainly not limited to the Golden State.

The truth is that a slowdown in home-price appreciation is a good thing, from an economic standpoint. Slower gains in the housing market will give wages a chance to catch up, or at least to narrow the gap.

According to David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, home prices cannot outpace income for long, before they being to slow:

“With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends,” Blitzer said. “Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”

But not everyone agrees on the level of appreciation during 2017. The economists at the real estate brokerage Redfin recently predicted that U.S. home prices would rise by 5.3% during 2017, which would be very close to the 5.5% year-over-year gain they reported for 2016. So it depends on who you ask.

Housing Market Conditions Vary at Local Level

Of course, these are home price forecasts for the U.S. as a whole. Housing market conditions can vary widely from one city to the next, and especially among different regions across the country. So, from a home buyer’s perspective, these trends are best examined at the local level.

Anyone planning to enter the real estate market in 2017 should look at current trends in the city or metro area where they plan to buy. National trends and statistics are not very useful to a buyer.

For example, some cities like Dallas and Seattle are expected to outperform the nation in 2017, where home-price growth is concerned. Other cities might experience little to no appreciation over the next 12 months (Zillow’s home price forecast for San Francisco calls for a gain of only 0.3%, for instance).

The point is, every housing market is different. So home buyers should concern themselves with what’s happening locally.

Disclaimer: This article includes U.S. home price forecasts for 2017. Those projections were provided by third parties not associated with our company. The Home Buying Institute makes no claims or assertions about future housing conditions.

Keller Williams Mid-Willamette Penalized for Illegal Kickback Scheme

Keller Williams Realty Mid-Willamette, a real estate brokerage located in Corvallis, Oregon, has been penalized and fined by a federal financial watchdog for participating in what has been called an illegal kickback scheme.

According to a January 31, 2017 press release from the Consumer Financial Protection Bureau (CFPB), Keller Williams Realty Mid-Willamette (a.k.a., Willamette Legacy, LLC) accepted illegal payments for referring mortgage customers to Prospect Mortgage, LLC, which was also penalized by federal officials.

Accepting payments or “kickbacks” of this nature is a violation of the Real Estate Settlement Procedures Act (RESPA), CFPB officials stated.

Keller Williams Realty Mid-Willamette Violates RESPA

During the course of its investigation, the Consumer Financial Protection Bureau reviewed the mortgage referral activities of the Corvallis, Oregon-based real estate broker Willamette Legacy, LLC, which does business under the name Keller Williams Mid-Willamette.

According to its consent order, the federal agency found the following law violations:

  • As part of some marketing services and lead referral agreements, Keller Williams Mid-Willamette accepted payments (or “kickbacks”) from Prospect Mortgage. These actions violate RESPA rules.
  • The real estate brokerage also provided a “cash equivalent” to its real estate agents when they referred a client to that particular mortgage lender. This too is a violation of RESPA guidelines and requirements.

Among other things, the Real Estate Settlement Procedures Act prohibits “steering incentives,” wherein a consumer is steered toward a certain lender or loan product that may or may not be in their best interest.

Illegal Payments for Customer Referrals

As stated in its news release, the CFPB’s investigation found that Keller Williams Mid-Willamette (and another company, ReMax Gold Coast) accepted illegal payments for referrals to the aforementioned mortgage company.

The consumer financial watchdog has prohibited both companies from further violating the Real Estate Settlement Procedures Act. CFPB stated that the companies must not “enter into any agreements with settlement service providers to endorse the use of their services.”

Keller Williams Mid-Willamette real estate brokerage must also pay $145,000 in disgorgement (the repayment of funds obtained illegally), plus an additional $35,000 in penalties. The damage to the company’s reputation, however, could greatly exceed these monetary penalties.

According to its website, Keller Williams Realty Mid-Willamette has several offices located around Oregon. Currently, the brokerage is led by Staci Barnes (Team Leader) and Dolf Peterson (Principal Reviewing Broker), though these individuals were not specifically named in the agency’s consent order.

Prospect Mortgage Paid the Brokerage $4,250 per Month

According to the Consumer Financial Protection Bureau consent order, Prospect Mortgage initially paid Keller Williams Mid-Willamette $4,250 per month as part of a marketing services agreement (MSA). In exchange for this monthly fee, the real estate brokerage “promised to perform certain marketing activities to help Prospect promote its mortgage lending services.”

The mortgage company reportedly established the $4,250 monthly fee by projecting the average number of lead referrals it expected to receive from Keller Williams Mid-Willamette real estate agents, as per the MSA.

Furthermore, the consent order explained that Prospect Mortgage had designated a specific loan officer (who worked directly out of the Keller Williams Mid-Willamette office but was paid by Prospect) to maintain the illegal kickback scheme.

The loan officer reportedly had regular discussions with the brokerage’s leadership team to discuss the effectiveness of the marketing services agreement. The loan officer would then complete a checklist that summarized the monthly meeting. The checklist noted that Keller Williams Mid-Willamette and Prospect Mortgage “review the capture rate and identify missed opportunities amongst agents and consumers.”

In this context, the “capture rate” refers to the percentage or proportion of the real estate brokerage’s clients (who used mortgage loans) that it “successfully steered to Prospect each month.”

The two organization’s eventually switched to a lead agreement. Under this agreement, Prospect no longer paid the fixed monthly amount to the real estate brokerage. Instead, they paid a variable fee “based on the number of consumers whose information [Keller Williams Mid-Willamette] shared with Prospect.”

Note: The information above is based on an official CFPB press release and consent order, both of which were published on January 31, 2017. For more information on this subject, refer to the Consumer Financial Protection Bureau’s website at www.consumerfinance.gov.

Source URL: http://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-prospect-mortgage-pay-35-million-fine-illegal-kickback-scheme/

Houston, Texas Housing Market Forecast 2017

Home prices in Houston, Texas have never been higher than they are right now, and there’s a chance they’ll rise even higher during 2017. That’s the Houston housing market forecast for 2017, according to a number of real estate analysts, economists, and industry leaders.

Related: Marketing support for Houston mortgage brokers

Houston Housing Market ‘Sprinting Toward 2016 Finish’

In a December 2016 press release, the Houston Association of Realtors (HAR) reported that the median price for a single-family home in the city rose by 8.3% in November, compared to a year earlier. The median climbed to $222,000 last month, reaching its highest point ever (even higher than the last housing bubble). The average price for homes in Houston rose to $281,671 in November, a year-over-year gain of 7.2%.

“It looks like the Houston real estate market is sprinting toward the 2016 finish line, based on the solid numbers in November’s report,” said HAR Chairman Mario Arriaga. “The market has shown tremendous resilience throughout the year in the midst of a struggling energy sector…”

Real Estate Forecast for 2017: Prices Rising More Slowly?

More inventory is coming onto the market, and this could slow the rate of home-price appreciation as we head into 2017. That’s the general forecast for Houston’s housing market in 2017.

Based on current construction trends, many real estate professionals expect the number of homes for sale to increase in 2017 as new inventory comes onto the market.

Mary Piper, director of relocation and operations with Bernstein Realty told the Houston Chronicle: “We feel that the inventory of homes will continue to increase after the new year, with both the election and holiday season behind us.”

HAR also cited inventory gains in its latest market report, saying that home sales were up due to “more plentiful inventory” in the area.

Due to the increased inventory, home prices in Houston could rise more slowly in 2017 than they did in 2016. Rising mortgage rates could also have a cooling effect on the local real estate market next year.

Houston Mortgage Rates Rise Sharply at Year’s End

Houston, we have lift off! Mortgage rates shot up like a rocket in November and December of 2016, reaching their highest level in two years. According to the weekly survey conducted by Freddie Mac, the average rate for a 30-year fixed home loan rose to 4.16% during the week ending on December 15, 2016.

mortgage rate chart 2016
Mortgage rate trends during 2016. Source: Freddie Mac.

The chart above, courtesy of Freddie Mac, shows mortgage rate trends during 2016. You can see the November-December surge on the far right side. So here’s another forecast for the Houston housing market in 2017: Mortgage loans will be more expensive next year.

Looking forward, the Mortgage Bankers Association recently forecast a continued, yet gradual, rise in rates through the end of 2017. In December 2016, the industry group issued the following forecast for the average 30-year mortgage rate:

  • Q1 2017: 4.3%
  • Q2 2017: 4.4%
  • Q3 2017: 4.6%
  • Q4 2017: 4.7%

Granted, this is just a prediction based on current market trends. So you probably shouldn’t “bank” on it. But it does underscore an important point. Both home prices and mortgage rates are expected to continue rising next year.

So home buyers who postpone their purchases until later in 2017 could end up paying more for a house, and for a loan. It’s worth considering.

Higher Loan Limits for Conforming, FHA and VA

Here’s some good news for home buyers and mortgage shoppers. Houston, Texas will see higher loan limits in 2017, for conforming, FHA and VA mortgage loans.

According to a November 2016 announcement from the Federal Housing Finance Agency, the conforming loan limit for a single-family home purchase in Texas will rise from $417,000 in 2016 to $424,100 in 2017. VA loan limits are aligned with the conforming caps, so they’ll also rise to $424,100 next year. FHA loan limits will increase slightly to $331,200.

These changes were made in response to home price gains that occurred during 2016, since loan limits are based on house values.

Disclaimer: This story includes predictions and forecasts for the Houston real estate market in 2017. Such statements are the equivalent of an educated guess. No one can predict future housing conditions with complete accuracy. The Home Buying Institute makes no claims, guarantees or assertions about the Houston, Texas housing market in 2017.

Phoenix, Arizona Real Estate Market Forecast for 2017

Home values in Phoenix rose steadily and sharply in 2016, climbing 9% to 11% depending on the source. But 2017 forecasts for the Phoenix housing market suggest that prices could rise more slowly over the next year or so.

In a somewhat contradicting report, the National Association of Realtors made a prediction that Phoenix would be the hottest real estate market in the country in 2017.

Phoenix Housing Market Forecast for 2017

According to the real estate data company Zillow, home prices in Phoenix, Arizona rose by 9.4% from December 2015 to December 2016. This is based on their own proprietary method for measuring median home values.

Be number one

By contrast, house prices nationwide rose by around 6% in 2016. So by this measurement, the Phoenix real estate market outpaced the nation in terms of home-price appreciation.

But what about next year? What’s the forecast for the Phoenix housing market in 2017? According to the research team at Zillow, home prices in the city will rise by around 3.7% during 2017. While that’s a lower level of appreciation than 2016, it’s still a healthy (and historically normal) year-over-year increase.

The economists at realtor.com® have a somewhat different view. They don’t think the Phoenix real estate market will slow down that much in 2017. In fact, they recently predicted that it will be the #1 housing market in the country in 2017, in a ranking that looked at 100 metro areas nationwide. The company’s economists expect home prices in Phoenix to rise by 5.9% next year, with a 7.2% increase in home sales (year over year).

Here’s a snapshot of their top housing markets list for 2017:

Hottest housing markets 2017
Top 10 housing markets of 2017. Source: realtor.com.

So what’s behind the top-ranked forecast for the Phoenix real estate market in 2017? What market factors are driving these predictions? Inventory has a lot to do with it. Or rather, the lack of inventory.

There is currently a lot of demand for housing in Phoenix, Arizona, particularly among retiring baby boomers who often relocate to the area. But there’s not enough inventory to satisfy the current level of demand, and this is pushing home prices north.

Buying a Home Now Versus Later

While home prices might rise more slowly in 2017 than they did this year, they are still predicted to rise steadily throughout the year. And that’s the key takeaway here, from a home-buying perspective. Forget about all of the “hottest housing market” rankings for a moment. The bottom line is that Phoenix home buyers who postpone their purchases until later in 2017 will likely pay more for a house.

Granted, you should never buy a home until you’re financially and emotionally ready for it. At the same time, you have to keep an eye on market trends. And the market is clearly trending upward right now.

Mortgage Rates on the Rise

Mortgage rates shot up over the last few weeks, and they’re expected to continue rising gradually throughout 2017. This is another important housing forecast for Phoenix home buyers, because it impacts buying power. Here are the latest trends on the mortgage front.

If a picture is worth a thousand words, the following chart speaks volumes. This chart accompanied the latest release of Freddie Mac’s weekly survey of the mortgage market. The big spike on the far-right side represents the last few weeks. As you can see, mortgage rates have risen sharply recently.

Mortgage rate trends December
Mortgage rate trends through December 8, 2016. Source: Freddie Mac.

Looking forward, both Freddie Mac and the Mortgage Bankers Association have predicted that rates will rise gradually during 2017. Granted, we probably won’t see any more big spikes like this one. But mortgage rates could inch upward over the next 12 months. That’s the forecast being offered by industry watchers, and it’s another important point to consider when planning to buy a home.

Disclaimer: This story contains predictions and forecasts for the Phoenix, Arizona real estate market in 2017. Data and projections were compiled from third-party sources not associated with our company. We have presented them here as an educational service to our readers.

Los Angeles Housing Market Forecast 2017: Home Prices Leveling

Home prices in Los Angeles, California have risen steadily — and significantly — over the last couple of years. But that might begin to change in the months ahead. Recent forecasts for the Los Angeles housing market suggest that prices could rise more slowly in 2017, compared to this year and last.

Los Angeles Housing Market Forecast for 2017

There has been a lot of talk lately that housing markets across California are reaching peak levels, in terms of affordability. As a result, market forecasts for 2017 are more conservative than in the past.

This is true for the Los Angeles real estate market as well. Recent predictions and forecasts from housing analysts suggest that L.A. home prices will slow down in 2017.

Take Zillow for example. The economists at the real estate information company recently predicted that Los Angeles home values will rise by a mere 1.7% over the next 12 months (through November 2017). That’s a much slower rate of appreciation than what we’ve seen during 2015 and 2016.

According to Zillow: “The median home value in Los Angeles is $590,400 … home values have gone up 7.3% over the past year and Zillow predicts they will rise 1.7% within the next year.”

This reflects the housing market forecasts being issued for many California cities. Across the Golden State, real estate markets are expected to cool down to some degree in 2017. Pick a city, any city, and chances are the 2017 home-price forecast is a fraction of the previous year’s gains.

Will Slowing Home Prices Silence the “Bubble” Talk?

The 2017 forecast for the Los Angeles housing market suggests that home values will rise more slowly over the next year. But that’s not necessarily a bad thing. In fact, it would ease concerns of a real estate price bubble.

At the end of 2015, Zillow surveyed dozens of economists and housing analysts about home price trends in the United States. According to the report accompanying that survey: “Ten or more experts think there’s a risk that Boston, Los Angeles or Miami will enter a [price] bubble in the next three years.”

That was in December 2015, and home prices in Los Angeles have risen steadily since then. A continuation of those rapid gains could, in fact, lead to a bubble scenario. But it doesn’t appear likely at this point. If recent predictions for the the Los Angeles real estate market prove true, and prices do in fact slow down considerably, then it would give the market a chance to “normalize” and wages a chance to catch up.

Mortgage Rates on the Rise

At the end of last year, mortgage industry analysts predicted that mortgage rates would rise steadily during 2016. They were wrong for the most part — until now. Thus far in November 2016, mortgage rates have been on a steady rise. Last week, the average rate for a 30-year fixed home loan shot up by nearly 40 basis points (0.40%). See chart below.

Freddie Mac rate chart, Nov
Mortgage rate trends to date. Source: Freddie Mac.

We expect the threat of rising rates to spur the Los Angeles housing market in 2017, particularly among home buyers. We will likely see a slowdown during the end-of-year holiday seasons, like always. But when the new calendars go onto the walls, a lot of L.A. home buyers will scramble to make their purchases before rates climb higher. We’ve been lulled by low mortgage rates for a long time. The latest spike, shown in the chart above, will serve as a wake-up call — and a call to action.

Disclaimer: This story contains predictions and forecasts for the Los Angeles real estate market in 2017. Such statements were compiled from third-party sources not associated with our company. We have presented them here as a service to our readers. The Home Buying Institute makes no claims or assertions about future housing market conditions in Los Angeles or elsewhere.

Opinion: How a Donald Trump Presidency Could Destabilize the Housing Market

The Home Buying Institute is encouraging its readers to steer clear of Donald Trump on election day. We feel that his “business” practices and philosophies could spawn policies that would have a destabilizing affect on the U.S. housing market.

Let’s go straight to the source. In 2006, before the last housing collapse, Trump stated: “I sort of hope that happens [the housing bubble bursts] because then people like me would go in and buy.”

These are dangerous qualities to have in an elected leader with such influence and power. Do we want a president who clearly only cares about himself?

Donald Trump Bad for the Housing Market?

Let’s be clear. Presidents don’t control the housing market. But they do have the authority to enact policies than can affect the housing market — for better or worse.

As voters, we cannot predict the future. We cannot say, with certainty, how a Hillary Clinton or Donald Trump presidency would affect the housing market. The best we can do is try to understand their views on such matters. And no one has made his housing-related views more clear than Donald Trump.

During the first presidential debate, on September 26, Hillary Clinton said that Donald Trump was “one of the people who rooted for the housing crisis. He said back in 2006, ‘Gee, I hope it does collapse because then I can go in and buy some and make some money.’ ”

Turns out, she was right. While Trump’s wording was slightly different, he said this just a couple of years before the housing market collapsed.

A man interviewing Trump for an audiobook asked him about the “pessimism” people had about a real estate bubble and its likelihood of bursting. To which Trump responded:

“Well first of all, I sort of hope that happens because then people like me would go in and buy. You know, if you’re in a good cash position — which I’m in a good cash position today — then people like me would go in and buy like crazy … If there is a bubble burst, as they call it, you know, you can make a lot of money.”

This isn’t speculation or part of some media “conspiracy.” These are Donald Trump’s personal views about the U.S. housing market, spoken in his own words. Watch the video below for an audio recording of Trump explaining his desire for a housing collapse.

He has made similar comments on other occasions. In fact, he practically bragged about it during one of the presidential debates. When Hillary Clinton called him out for wanting to capitalize on a housing collapse (despite the financial damage it did to millions of people), Trump replied by saying:

“That’s called business, by the way.”

Clinton followed up by saying five million people lost their jobs, and $13 trillion in family wealth was wiped out (by the housing crisis and ensuing recession). Trump appeared to shrug off these numbers, because it didn’t happen to him.

Rational people who care about the stability of the U.S. economy should be horrified at the thought of a Trump presidency.

In It for Himself

There is nothing illegal about buying depreciated assets after a financial calamity, in order to make money. It’s an investment strategy (of questionable ethics). That’s not the issue we have, as real estate educators.

What’s worrying to us is the fact that Trump doesn’t seem to care about the stability of the U.S. housing market, or the fact that millions of people lost their homes during the housing crash. He doesn’t seem to care that the housing crash took the national economy down with it, leading to the most severe downturn since the Great Depression.

As long as Donald Trump comes out on top, none of these things are his concern.

In a president, this kind of sentiment could be disastrous. A president, for example, could enact policies that destabilize the housing market. A president that views the United States residential real estate market as a financial instrument to be used for personal gain, while ignoring the impact it has on other people’s lives, is a dangerous president.

That is why we strongly discourage our readers from voting for Trump.

5 U.S. Housing Market Forecasts and Predictions for 2017

It’s October, and at the Home Buying Institute that means it’s time to round up housing market forecasts and predictions for the upcoming year.

“Cooling” seems to be the key word for 2017. Many analysts and economists expect the residential real estate market to cool down over the next 12 months, in terms of both competition and home-price appreciation.

Here are five more U.S. housing market forecasts for 2017.

5 Housing Market Predictions for 2017

Housing markets in a handful of metro areas will continue to sizzle in 2017, while the rest of the country could experience a cooling trend. Mortgage rates will likely hover in the 3.5% range for the short term, but could rise above 4% through the first half of 2017. Loan limits could also rise in some parts of the country next year, in response to rising home values.

Let’s take a closer look at these and other housing market forecasts and predictions for 2017.

1. Home prices nationwide to rise 3% – 5% over next 12 months.

In October, the economic research team at Zillow issued this 12-month forecast for the U.S. housing market: “United States home values have gone up 5.1% over the past year and Zillow predicts they will rise 2.7% within the next year [through October 2017].”

The widely cited CoreLogic HPI Forecast suggests that house prices in the U.S. will rise by 5.3%, year over year, from August 2016 to August 2017.

The Zillow prediction extends through October, while the HPI Forecast looks out to September of next year. Additionally, the two companies use different data models to make their projections. Hence, the different estimates.

Of course, these are national forecasts for the U.S. housing market as a whole. At the local level, we expect to see a broad spectrum of price increases (and, in some cases, price declines) over the next 12 to 14 months. Which brings us to housing market prediction #2.

2. California’s red-hot housing markets will cool significantly.

Many California cities experienced tremendous price growth over the last few years. But that’s beginning to change. Housing markets across the Golden State are slowing down, as demand softens. Affordability is an issue in many of these markets. Buying a home has become cost-prohibitive in many parts of the state, for the majority of residents. Some residents are leaving the state because of it.

Housing markets across California are undergoing a shift. It’s not a buyer’s market yet, but it’s not the strong seller’s market of years past either. Home prices are leveling off in many major metros.

For example, Zillow recently issued a housing market forecast for San Francisco, which was one of the hottest real estate markets 18 months ago. By their estimation, home prices in the city will actually drop a bit over the next 12 months.

“San Francisco home values have gone up 0.6% over the past year and Zillow predicts they will fall -0.4% within the next year,” the company said in October 2016. This is a market that has peaked, plain and simple.

Similar trends are playing out across the state, though to varying degrees. In San Diego, for example, home prices are expected to rise by just 1.7% over the next 12 months, compared to a gain of 4% over the last year or so. In Los Angeles, it’s the same thing. Prices rose 6.9% over the last year, according to Zillow. But they are forecast to rise by a mere 1.3% over the next year.

3. The hottest markets will continue to be in the Pacific Northwest.

Housing market forecasts for 2017 suggest that Seattle, Portland and other real estate markets in the Pacific Northwest will continue to outpace the nation in 2017, in terms of home-price appreciation.

This housing market forecast is based on solid evidence. After all, the Seattle and Portland metro areas saw double-digit price growth during 2016, and the supply-and-demand situation that caused this hasn’t changed significantly. So these markets will probably see bigger home-price gains in 2017 than most other metros.

This housing market prediction has been echoed from several sources, including the folks at Zillow. Their 12-month forecasts for Seattle and Portland (through October 2017) call for price gains of 6.9% and 7.5% respectively, much higher than the 2.7% increase predicted for the nation as a whole.

Related: Seattle leading the pack in 2017

Earlier this year Veros Real Estate Solutions, a company that specializes in property valuations and analytics, published a U.S. housing market forecast that singled out Portland and Seattle as two of the markets to watch over the coming months. Their forecast extended through June 2017.

According to the report:

“The top forecast markets are showing appreciation in the 10% to 11% range with the Pacific Northwest and Colorado having a lock on 8 of the top 10 … Seattle, Wash. (+11.2%), Portland, Ore. (+11.1%), Denver, Colo. (+9.9%) and other metropolitan areas in these same vicinities appear very strong over the next year.”

4. Mortgage rates will rise gradually in 2017 but stay below 5%.

This housing market forecast comes from the Mortgage Bankers Association (MBA), which recently predicted a slight rise in mortgage rates through the end of this year. The MBA expects the average rate for a 30-year home loan to reach 3.7% by the end of 2016, and to continue rising gradually throughout 2017.

Here is their latest forecast for 30-year mortgage rates, issued in September:

  • Q1 2017: 3.9%
  • Q2 2017: 4.1%
  • Q3 2017: 4.3%
  • Q4 2017: 4.4%

Of course, a number of analysts made similar predictions at the end of last year. The general consensus was that mortgage rates would rise gradually throughout 2016. But that did not happen. In fact, the average rate for a 30-year home loan has declined since the beginning of this year.

It goes to show, you have to take mortgage and housing market forecasts with a grain of salt. They’re an educated guess, but they don’t always pan out.

5. FHA and conforming loan limits could rise in some metro areas.

Most mortgage programs have size limits associated with them. For instance, there are “conforming” loan limits that dictate the maximum size for mortgage loans that can be sold to Fannie Mae and Freddie Mac. There are limits for FHA and VA loans as well.

All of these loan limits are based on median home prices, to some extent. And since prices have risen sharply in many cities this year, we could see some higher loan limits in 2017.

Loan limits vary by county and are generally the same across an entire metro area. For instance, all cities and counties within the Seattle metro area have the same loan limits. And that’s one of the places that could see higher limits in 2017. Home prices in Seattle (and a few other metro areas) rose by double digits during 2016. It would not be surprising to see federal housing agencies increase loan limits for some of these housing markets in 2017.

Like Real Estate Forecasts?

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Disclaimer: These U.S. housing market forecasts and predictions have been provided for your reading enjoyment. But you shouldn’t bank on them. They include third-party data and projections from people and organizations not associated with the Home Buying Institute. They are the equivalent of an educated guess. HBI makes no claims or assertions about future housing market conditions.