Due to seasonal changes in demand, the housing market is difficult to pin down. And with today's ever-changing political and economic climate, it's even more exhausting trying to get a clear picture of what's to come.
That being said, so far in 2017 one thing has been very clear: supply is low, demand is high.
According to Forbes, there are a few more facts we can ascertain based on past trends and new housing market research.
Yes, Housing Prices Really Can Get Higher in 2017
Housing prices increased every single month last year (through October), with an additional 5.61% increase across the national price scale. While home buyers are already struggling with high prices, real estate expects now predict that prices will continue to rise, though more slowly, throughout 2017.
“We believe price increases will hold steady despite slowing sales growth, because homebuyer demand is stronger now than it was at the same time last year, and because we foresee a small uptick in homes for sale,” said Nela Richardson, chief economist at real estate brokerage Redfin.
Redfin expects the median home price to gain roughly 5.3% this year compared to 2016, which would not be too far off from the 5.5% year-over-year expectations.
“With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends,” added David Blitzer, chairman of the Index Committee at Dow Jones Indices. “Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”
Renovating for ROI, Not Quality of Life
One thing that homeowners can at least control, to the best of their ability, is their return on investment (ROI). Though they can't say with any certainty that the market will be favorable in five, ten, or even 20 years, homeowners can at least do a few things to increase their ROI and improve their home's value.
Major home renovations, for instance, can significantly improve a home's property value for the future. Of all the remodeling projects that are performed in the U.S., from small jobs to extremely large additions, a surprising 35% of projects involved whole home renovations. Unsurprisingly, whole home renovations lead to the highest increase in value.
Kitchen improvements can yield one of the highest ROIs as well. Although performing DIY renovation projects inside a kitchen can be simple enough, in order to really increase a home's value, it's recommended to work with a professional home improvement contractor. According to a 2016 Houzz Kitchen Trends Study, about 87% of homeowners enlisted the help of a professional during their kitchen remodeling project.
Consumer Reports states that performing renovations like this can result in making new home buyers much more eager to close.
“When a home is move-in ready and buyers know they can be cooking in the kitchen from day one and entertaining in the backyard that very weekend, you know you’ve got a winner,” said Lorella Martin of Redfin.
Although these major interior home renovations can significantly increase overall property value, focusing on the exterior of a home can have the same effects. Landscaping improvements can actually increase a home’s resale value by up to 14%, and major outdoor additions like adding a pool or garden can yield even higher returns on your initial investment.
“[Buyers] are into big spaces,” added Kristin Wellins, Senior Manager of Program Development for ERA Real Estate. “Right now, buyers want a wide open floor plan [with] the living room right off the kitchen.”
Real Estate Goes Digital
One housing trend that buyers and sellers alike should keep tabs on is the increasing popularity of buying and listing online. According to CNBC, Redfin stocks actually surged more than 44% in its initial public offering (IPO), prompting CEO Glenn Kelman to say that Redfin is the “Apple of real estate.”
“I am so proud of the company right now,” Kelman added.
Redfin specializes in buying and selling homes by using mobile apps for various tasks like scheduling home tours, suggesting listings, and real estate agent communication.
Of course, no amount of technology will let a real estate company escape the brutal reality of the 2017 residential real estate market.
Though Redfin has been extremely successful as of late and technology has revolutionized the housing industry already, Kelman is still fully aware of the inventory shortage currently plaguing the U.S. housing market.
“It's freaking us out, it's affecting our business, it's limiting our sales,” he added. “We're going to be fine in terms of market share but I think the overall industry for the first time is seeing sales volume really limited by the inventory crunch.”