It’s that time of year again to take stock of the successes of 2016 and analyze how the market will play out in 2017. Many of the big market watchers like the National Association of Realtors, Inman News, and financial market magazines have already put in their predictions. Here are the collated real estate market forecasts for the 2017 in the USA and Canada.
Home Sales Up Again
“NAR is predicting existing-home sales to reach 6 million in 2017, higher than its 5.8 million forecast for this year. But other entities are even more bullish. MBA is predicting home sales to eclipse 6.5 million next year, while Fannie Mae and Freddie Mac are both predicting 6.2 million,” according to RealtorMag. GordCollins elaborates on this projected trend: “US housing starts and resales are on the rise 2017 to 2020 and beyond. And given the huge population of Generation Y buyers have put off home ownership and are coming into their key buying years up to 2030, sales of homes and condos are predicted to continue strong well past 2020.”
Inman News has projected that single-family will also increase “from around 715,000 to 800,000 units in 2016, a trend that will continue with 850,000 and 900,000 new units expected in 2017 and 2018, respectively.”
Moving Out of Starter Homes
“Over the five years between 2011 and 2016, the average price on a two-bedroom house climbed 59% nationwide, while four-bedroom houses rose a more modest 41%” according to Fortune. This means that families looking for more space may spend 2017 making the jump to the next level while their own home holds value and the next level up stays a bargain. Time echoes this and offers further advice for those making the move to a larger home – “Because you’re well positioned as a seller, and you want to walk away with as much money as possible for your next down payment, choose a higher offer over a speedier close, suggests Lawrence Yun, chief economist at the National Association of Realtors.”
Suburbs go ‘Surban’
Looking for affordable housing, more renters will transition to the suburbs to find an affordable home. MarketWatch expects “nearly 80% of residential growth to occur in suburban communities over the next 10 years — up from 71% from 2010 to 2015 — compared to just 15% for ‘urban’ areas through 2025.” This trend they refer to as “surban” highlights a mixed-use model where offices, commercial, and residential zones allow workers to walk or bike to work/shop, bringing the amenities of the urban lifestyle out into the suburbs. Residential zones will feature the traditional single family home along with apartments, condos, and townhomes.
The average residential sale price increased 13 percent in Greater Vancouver to approximately $1,020,300 and rose 17 percent in the Greater Toronto Area (GTA) to an estimated $725,857. Although demand remains high in both urban centres, limited inventory in the freehold market, the new 15 percent foreign-buyer tax in Vancouver and the recent tightening of mortgage rules by the federal government are expected to soften market activity in the short term.
In 2017, RE/MAX estimates average residential sale price will increase by two and eight percent in Greater Vancouver and the GTA respectively.
Regional markets in close proximity to Canada’s highest-price cities continued to experience steady interest from local move-up buyers and buyers from these cities (“moveover” buyers) who are looking to find a balance between affordability and square footage.
Some highlights from our 2017 Report:
- Ontario Greenbelt: Policies around building on the Ontario Greenbelt are expected to continue affecting inventory levels, as the number of single-detached homes developers are able to build is restricted and therefore not able to meet demand
- Mortgage Rules: The effect of tightened mortgage rules and anticipated mortgage rate increases will impact housing affordability in the GTA
- Luxury Market Opportunities: As baby boomers look to downsize to high-end condos, new single-family detached homes in the upper end of the market are expected to become available in 2017