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?

Do you enjoy reading real estate market forecasts and predictions? If so, you should follow us on Twitter. We regularly publish updates for major U.S. cities and metro areas, including: Atlanta, Austin, Boston, Chicago, Dallas, Denver, Houston, Miami, Los Angeles, New York City, San Francisco and others.

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.

66-Page Handbook for Bay Area Home Buyers Available for Free

A new e-book published recently helps San Francisco Bay Area home buyers make informed decisions when buying a house in that red-hot real estate market.

Bridgepoint Funding, a full-service mortgage company located in Walnut Creek, California, has published a 66-page handbook for Bay Area home buyers. The book can be downloaded in PDF format for free via the company’s website.

Here is the book’s download and information page:
http://www.bpfund.com/bay-area-buying-guide/

According to a related press release, this comprehensive e-book was created specifically for home buyers and mortgage shoppers in the San Francisco Bay Area. It is part of a broader educational campaign launched by the company.

An Update on the Bay Area Housing Market

The Bay Area housing market has changed significantly in recent years. It went from boom to bust and is not in a sustained recovery. Many cities in the area have experienced double-digit home price increases in the last year alone. Meanwhile, residential real estate inventory has shrunk, forcing Bay Area home buyers to compete fiercely with one another.

Those who are planning to enter this hot housing market should educate themselves beforehand. That’s where the Bay Area Home Buying Guide comes in. The book starts off with an update on regional housing market conditions, including forecasts from several analysts and economists. After that, it takes the reader through the entire home buying process, in step-by-step fashion.

Part of a Larger Educational Campaign

Bridgepoint Funding says the Bay Area home buyer’s guide is just one part of a broader educational campaign it is conducting. The company also researches and writes about the housing market on its blog, several times per week.

According to Mike Trejo, owner of Bridgepoint Funding, educating home buyers and mortgage shoppers has always been a key part of the company’s philosophy:

“Buying a home is such an important milestone in people’s lives,” Trejo said. “It’s important to me that they are well informed about the process. We want to be their mortgage partner for the long term, and education is a key part of that relationship.”

How and Where to Download the Guide

Bay Area home buyers can download the 66-page guide in PDF format, at no cost. The e-book can be viewed on any PDF-capable computer, as well as most mobile devices. It can also be printed for easier reading.

The company said it encourages Bay Area real estate agents and other housing professionals to share the guide with their own website visitors. For licensing guidelines and sharing instructions, please refer to the book’s information page linked above.

Is the Market Finally Cooling Off?

In other Bay Area housing market news, real estate professionals from around the region are reporting what they feel are the early signs of a cooling trend. Trisha Motter, president of the Santa Clara County Realtors Association, recently told CBS SF Bay area:

“We’re not seeing the bidding frenzies or paying as much over list price as we were before … The market has slowed down. Houses are staying on the market longer.”

This is one of several reports we’ve seen in recent weeks that suggest the Bay Area housing market could be slowing. A cooling trend might be just what the doctor ordered at this point, given the housing affordability issues that have arisen in recent years.

Dallas Housing Market Forecast 2017: Will It Continue to Outpace the Nation?

Economists are calling Dallas one of the hottest real estate markets in the country. Recent forecasts suggest the city could outpace the nation in 2017 as well, in terms of home-price gains. Here are the latest housing market trends, forecasts and predictions for Dallas, Texas.

One of the Hottest Real Estate Markets in August

In August, the economists and analysts at Realtor.com created a list of the hottest real estate markets in the U.S., for that particular month. Their “hotness” rankings were based in part on how quickly homes are selling, and how much demand their is from buyers.

According to the report:

“[Chief economist Jonathan] Smoke and his team looked at the median number of days homes spent on the market to gauge the supply of homes for sale, and the number of listing views per market to arrive at a list of the 20 hottest real estate markets in the country.”

Based on their analysis, Dallas was ranked as the second-hottest real estate market in the nation for the month of August, with relatively quick sales and strong demand.

Perhaps this is why most 2017 forecasts for the Dallas housing market are calling for continued (and significant) home-price gains next year. There is a lot of demand for homes across North Texas, but limited supply. This is putting upward pressure on residential property values.

Dallas marketing services

Rapidly Rising Home Prices

According to the widely cited Case-Shiller Home Price Index, house values in Dallas are higher now than ever before. In fact, they’re well above the peak reached during the last housing bubble.

The median home price in the DFW area is around $230,000, according to a report published recently by HSH.com. Several sources have reported double-digit gains in house values over the last year. That’s a much faster rate of appreciation than the national average.

Which begs the question: How much higher can home prices climb in the area? Here are some forecasts and predictions for the Dallas housing market in 2017.

Dallas Housing Market Forecast for 2017

The real estate information company Zillow recently offered a 12-month forecast for the Dallas market, projecting through August 2017. By their estimation, home prices in the city will rise by approximately 7.3% between now and this time next year.

In August, the company stated: “Dallas home values have gone up 16.6% over the past year and Zillow predicts they will rise 7.3% within the next year.” By comparison, they are predicting a gain of only 2.4% for the nation as a whole. So in this regard, the Dallas housing market is predicted to outpace the nation over the next year.

Earlier this month, the Scottsdale, Arizona-based home builder Taylor Morrison announced they would be expanding into the Dallas real estate market. The company said it would focus it’s home-building efforts on the $300,000 to $500,000 price point, “which research has shown is underserved in the Dallas real estate market.”

On the mortgage front, analysts are forecasting a continuation of the low rates we’ve seen in recent weeks, at least in the short term. The average rate for a 30-year fixed home loan has been hovering below 3.5% for the last few weeks. The Mortgage Bankers Association (MBA) recently predicted that 30-year mortgage rates would rise gradually in the months ahead, but stay below for 4% for the rest of this year.

Here is the MBA’s August forecast for average 30-year mortgage rates, by quarter:

  • Q3, 2016: 3.5%
  • Q4, 2016: 3.7%
  • Q1, 2017: 3.9%
  • Q2, 2017: 4.1%
  • Q3, 2017: 4.3%
  • Q4, 2017: 4.4%

In Conclusion

The general consensus appears to be that home prices in Dallas will continue to rise steadily in 2017, but at a slower pace than the last couple of years.

Housing demand is expected to remain strong due to low mortgage rates and the relatively strong job market in the Dallas-Fort Worth metro area. Rising home prices could weaken demand, though, as affordability becomes an issue for some would-be buyers.

Disclaimer: This story includes forecasts for the Dallas housing market in 2017. Predictions were made by third parties not associated with our company. The Home Buying Institute makes no claims or assertions regarding future real estate conditions.

Seattle Real Estate Market Forecast for 2017: Leading the Pack, Again?

Back in February, I wrote about Zillow’s prediction that Seattle, Washington would be one of the hottest housing markets in 2016. Turns out they were right. Seattle has generated a slew of headlines this year, mainly due to the rapidly rising home prices in the area.

Well, here we go again. The city is now expected to be one of the hottest markets in 2017, as well.

Seattle One of the Hottest Housing Markets in 2017?

Economists and housing analysts are beginning to offer predictions for 2017, and the Seattle real estate market is once more standing out from the pack.

Veros Real Estate Solutions, a California-based company that specializes in property valuations and analytics, recently published a real estate market forecast for major metro areas across the U.S. In their view, the Seattle-Tacoma-Bellevue metropolitan area could experience the biggest home-price gains from June 2016 to June 2017 (among metro areas that were analyzed).

According to their report, published on July 11:

“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.”

This outlook is based on the company’s latest VeroFORECASTSM, a quarterly forecast for the national real estate market that covers the 12-month period ending June 1, 2017.

Home Prices Now Higher Than Ever

In June, house values in Seattle rose to a new all-time high. According to a recent report from ATTOM Data Solutions (the parent company of RealtyTrac), the median home price in Seattle rose to $385,500 in June of this year — the highest it has ever been.

“Home prices in the greater Seattle area continue to appreciate above average rates,” said Matthew Gardner, chief economist at Windermere Real Estate. “This is clearly an indication of not only continued faith in the housing market, but also the buoyancy of the regional economy.”

Population growth has a lot to do with this. Seattle’s bustling job market — and its booming tech industry in particular — are luring the young and upwardly mobile from elsewhere in the country. This increases demand for housing, at a time when supply is limited. Home prices tend to rise under such conditions.

According to a recent article published by Sammamish Mortgage, a Bellevue, Washington-based mortgage company: “Despite a recent uptick in construction activity, there just aren’t enough homes on the market [in Seattle] to satisfy the current level of demand.”

It’s that supply and demand thing again.

Zillow’s Forecast for 2017: Additional Gains

The real estate information company Zillow has offered another prediction for the Seattle housing market in 2017. But it’s a bit more modest than the double-digit price projection made by Veros (above).

In August 2016, the company published this statement on its website: “Seattle home values have gone up 16.7% over the past year and Zillow predicts they will rise 8.1% within the next year.” This is based on the company’s “Zestimate,” an estimate of current market value.

Here’s the bottom line to all of these stats and projections: Seattle, one of the hottest real estate markets in 2016, is expected to continue sizzling in 2017.

Disclaimer: This story contains predictions and forecasts for the Seattle housing market in 2017. Those forward-looking statements were provided by third parties not associated with our company. As a rule, the Home Buying Institute does not make claims or assertions about future housing conditions.

Chicago Housing Market Forecast for 2017: More Appreciation Ahead?

Home prices in the Chicago metro area rose steadily over the last year or so. Additional, yet modest, gains are expected in 2017 as well. This is based on several forecasts and predictions for the Chicago real estate market in 2017.

Current Trends Across the Metro Area

Median home prices and sales activity both increased in June. According to the Illinois Association of Realtors, 13,620 homes were sold in the Chicago metro area this June, which is an increase of 2.1% from the same time last year.

Meanwhile, the median price paid for a home in the Chicago area rose 4.6% in June, compared to last year. The median sales price rose to $242,500 in June 2016. Again, that’s for the entire metro area.

Currently, the Chicago housing market favors sellers over buyers. According to Mike Drews, president of Illinois REALTORS: “Sellers continue to reap the rewards of a summer market where buyers are choosing from a greatly diminished pool of properties.” He added that housing supply is struggling to “keep pace with buyer demand.”

These trends no doubt fuel the Chicago housing market predictions for 2017, some of which call for additional price gains over the next year or so.

Zillow Forecast for Chicago Housing Market, Through July 2017

Zillow has forecast additional home-price gains for the Chicago housing market, between now and the summer of 2017. By their estimation, house values within the city will rise by 1.7% over the next 12 months (roughly, July 2016 – July 2017).

That’s for the city itself. Their one-year forecast for the broader metro area calls for a gain of 2.5%, during the same 12-month time frame. On July 27, 2016, the company issued this statement on its website: “Chicago Metro home values have gone up 3.3% over the past year and Zillow predicts they will rise 2.5% within the next year.”

That’s one positive real estate market forecast for Chicago in 2017. Here’s another that comes out of the University of Illinois:

Short-Range Prediction for Chicago Home Prices

In July 2016, the Illinois Association of Realtors published a short-range housing market forecast for the Chicago metro area, looking out over the next few months. It was based on data and analysis provided by Geoffrey Hewings, director of the Regional Economics Applications Laboratory (REAL) at the University of Illinois.

In the Chicago metro area, median home prices are expected to rise 7.1% in August 2016, compared to the same time last year. In September, prices are expected to be up 5.2% year over year.

The REAL housing price index (HPI) predicts even stronger growth in the coming months. According to the report: “The REAL HPI [for the Chicago metro area] is forecast to rise by 8.2% in July, 10.3% in August and 10.3% in September [2016].”

So we have positive real estate market predictions in both the short and long-term, from two different sources. While no one can predict what the housing market will do with complete accuracy, the general consensus appears to be that Chicago metro-area home prices will continue to rise in 2017, but a modest pace.

Case-Shiller Index: 3.7% Annual Gain in May 2016

According to the latest S&P/Case-Shiller Home Price Index, published on July 26, house values in Chicago rose 3.7% from May 2015 to May 2016. They rose 1.8% from April to May alone.

The fact that the one-month gain from April – May 2016 is nearly half of the annual gain suggests that home-price appreciation accelerated in the spring of this year. That would jive with Zillow’s forecast for the city of Chicago, which calls for larger gains between now and July 2017, compared to the last 12 months.

No matter how you measure it, the Chicago real estate market has experienced home-price appreciation in recent months. And the trend is expected to continue, to some degree, through the end of this year and into 2017.

Freddie Mac Outlook: Mortgage Rates Rising in 2017

Mortgage rates are also expected to rise in 2017. That’s the latest forecast offered by the economists at Freddie Mac, the government-controlled buyer of mortgage loans.

Here is their forecast for 30-year loan rates between now and the end of 2017. These are the average rates they expect to see during each quarter.

  • Q2, 2016: 3.9%
  • Q3, 2016: 4.2%
  • Q4, 2016: 4.4%
  • Q1, 2017: 4.5%
  • Q2, 2017: 4.7%
  • Q3, 2017: 4.9%
  • Q4, 2017: 5.1%

As shown here, the economists at Freddie Mac feel that 30-year mortgage rates will rise steadily later this year and into 2017.

When this article was published, in July 2016, the average rate for a 30-year mortgage was 3.48%, according to the Freddie Mac weekly market survey.

Granted, this outlook is the equivalent of an educated guess. So you probably shouldn’t “bank” on it. The key takeaway here is that the company’s economists expect rates to rise gradually over the coming months.

Disclaimer: This article includes forward-looking statements (forecasts and predictions) relating to the Chicago real estate market. Such statements were provided by third-party sources not associated with our company. As a general rule, the Home Buying Institute does not make assertions or guarantees about future housing conditions.

Denver Real Estate Market One of 10 Most Stable in U.S. in 2016

The Denver, Colorado real estate market is currently one of the most stable in the nation, according to a recent ranking by SmartAsset. Boulder and Fort Collins were ranked #1 and #6, respectively.

We’ve written about the Denver housing market a lot in 2016, mainly for its inclusion in top-10 lists. For instance, back in February, the real estate information company Zillow included the Mile-High City in a list of the top 10 housing markets to watch in 2016. Denver has appeared in similar lists measuring home-price gains.

Denver Real Estate Market Among the Most Stable in U.S.

And now, here comes another top-10 list featuring the Denver real estate market. In June, the New York City-based personal finance company SmartAsset created a list of the ten best housing markets for growth and stability.

To create its list, the company “relied on two factors: the overall home price growth rate since 1991 (our growth factor) and the average odds that a homeowner in a particular market would have experienced significant price declines within the decade after buying a home (our stability factor).”

In other words, they looked backward as well as forward — as much as possible without a crystal ball, anyway. Based on their analysis, the Denver housing market was ranked as one of the most stable in the nation in 2016, and poised for continued growth.

Boulder, Colorado also made the list, appearing at #1. Fort Collins appeared at #6.

Here are the ten most stable housing markets, according to SmartAsset:

  1. Boulder, Colorado
  2. Austin-Round, Rock Texas
  3. Casper, Wyoming
  4. Bismarck, North Dakota
  5. Midland, Texas
  6. Fort Collins, Colorado
  7. Billings, Montana
  8. Missoula, Montana
  9. Denver-Aurora-Lakewood, Colorado
  10. Grand Forks, North Dakota

But Denver has had its share of ups and downs, where home prices are concerned. As the authors of the SmartAsset study pointed out: “While there has been a 270% total growth rate since 1991, the Denver-Aurora-Lakewood housing market … has seen home prices drop significantly at times during that period.”

Strong Housing Demand Lifting Home Prices

In recent years, home prices have risen steadily in the Denver real estate market. According to Zillow, the home value index for the city rose by around 10% over the last year or so, and the company’s 12-month forecast calls for another 5% growth.

Home prices tend to rise whenever there’s strong demand for housing, especially when inventory is limited by comparison. That’s exactly what we are seeing in the Mile-High City. A recent report by CoreLogic showed that the median sales price for houses and condos in the Denver real estate market rose 10.3% in May 2016, compared to the same time last year. That was the highest year-over-year increase among the nation’s largest cities, according to CoreLogic.

Population growth has a lot to do with these steady home-price gains. A lot of folks want to live in the Denver area, but there’s only so much real estate to go around (especially close to the city’s core). This creates a supply-and-demand imbalance and pushes home prices north.

According to a recent analysis by the U.S. Census Bureau, Colorado is the second-fastest growing state in the country, for population. And Denver is one of the ten fastest growing metro areas in the U.S., according to Forbes. (Chalk up another top-10 ranking.)

And what’s not to love about the Mile-High City. It has jobs, natural beauty, plenty of outdoor activities and nightlife, and recreational marijuana. No wonder it’s a mecca for the young and upwardly mobile.

Disclaimer: This story includes third-party data and assessments that are deemed reliable but not guaranteed. As a general rule, the Home Buying Institute does not make predictions or forecasts relating to the real estate market.

Austin, Texas Housing Market Named Second Most Stable in the U.S.

According to a recent analysis by the finance website SmartAsset, Austin, Texas is the second most stable housing market in the United States. Boulder, Colorado was ranked first. Home prices in Austin have risen more or less steadily for many years, while avoiding the extremes of other real estate markets across the country.

Austin Housing Market #2 in the Nation for Stability

This isn’t particularly surprising, when you look at the history of this housing market. Like most metro areas in Texas, the real estate scene in Austin was relatively stable during the housing crisis that began around 2008. Home values in the area dipped slightly during those years, but it was nothing like the price plummet seen elsewhere across the country.

But what is a “stable” real estate market exactly? According to SmartAsset, these are cities and metro areas with a steady upward trend in home prices and (perhaps more importantly) a low probability of depreciation in the near future.

As the company explained on its website:

“In order to complete our analysis, we relied on two factors: the overall home price growth rate since 1991 (our growth factor) and the average odds that a homeowner in a particular market would have experienced significant price declines within the decade after buying a home (our stability factor). In order for a price decline to be significant, home prices in any quarter within 10 years had to fall by at least 5% relative to the original home price.”

Since 1991, home prices in Austin’s housing market have risen by a whopping 271%, according to the study. More to the point, homeowners haven’t suffered any major price declines in that time.

Boulder, Colorado topped the list with the most stable growth over the past 25 years. House values in that city have risen more than 300% since 1991, again without any major declines.

Here’s a complete list of the top-ten most stable housing markets:

  1. Boulder, Colorado
  2. Austin-Round, Rock Texas
  3. Casper, Wyoming
  4. Bismarck, North Dakota
  5. Midland, Texas
  6. Fort Collins, Colorado
  7. Billings, Montana
  8. Missoula, Montana
  9. Denver-Aurora-Lakewood, Colorado
  10. Grand Forks, North Dakota

Supply and Demand Driving Home-Price Growth

You might have noticed a common trend in this list, in terms of geography. These cities are mostly located in the Midwest, while the east and west coasts are not represented at all. That’s no coincidence, but rather a direct result of supply and demand.

According to Daren Blomquist, the vice president of RealtyTrac: “In the middle-America markets there is more room to create more supply than in the coastal markets, which are often constrained geographically as well as by more regulation.”

As the report’s authors pointed out, strong demand continues to drive price growth in the Austin real estate market. The city has much to offer young people in particular, which helps fuel the local housing market. Austin has been ranked as one of the best cities for college graduates, partly due to the strong job market and vibrant nightlife. This brings more upwardly mobile residents into the market, boosting demand for homes.

But housing supply is not as constrained in Austin, as it is in places like San Francisco and New York City. There’s plenty of room to build around the city, and land is relatively cheap (especially when you get further out from downtown). So while housing demand continues to lift home prices in Austin, it does so at a more sustainable pace than many metro areas.

Disclaimer: This story includes third-party data and assessments that are deemed reliable but not guarantee. As a general rule, the Home Buying Institute does not make predictions or forecasts relating to the real estate market.