Even though the real estate market is far from being termed as booming but the slowdown is temporary and this New Year, we can expect to see a surge in activity. There are three important things that we will definitely witness in 2017 – Slow growth rate of the economy, increase in home prices, leaning towards renting. Now, this might sound similar to what we experienced in 2016; however, the investment risks will be much higher.
Slow Growth Rate of the Economy
If we are to believe the Federal Reserve then we can expect the economy to do better in 2017 and it is also going to get stronger. However, people in the real estate market are aware that this is far from being true and in fact the Federal Reserve is being a bit too optimistic.
US economy goes through long phases of highs and lows and this is quite true for the job market. During the recession, job creation had plummeted considerably. However, it picked up later to touch 2.3% in the year 2015, after which it again dived to 1.6%. So going by this trend, we can expect the economy to bounce back in 2017.
We are witnessing a very unfortunate situation and at best we can expect our economy to register some growth if the borrowing by consumers is curtailed.
Increase in Home Prices
The year 2012 saw home prices dip like never before and after that it has steadily grown at a rate of 5% every year. However, the price difference is quite huge between big cities and the smaller ones. This can be attributed to higher population and job growth in the bigger cities compared to the smaller ones. It is quite easy to identify the markets where prices will rise but the big question is whether the smaller markets present good investment opportunity or not. How does one invest in the markets that are already witnessing over pricing?
Leaning Towards Renting
As an investment proposition, nothing can beat renting out the single-family homes after buying and fixing them. Investors flocked for buying the bargain homes that offered quick return on investments. Renting has always been favorable and nothing can beat it in term of returns that are kind of guaranteed. So in 2017, if you wish to make the most of your investments, you can always opt for renting.
2017 will probably be plagued by several problems like slow job creation, higher debts and lower incomes but there are many opportunities to be explored as the year progresses.