Metrostudy Housing Market Forecast Expects More Growth in 2017
Recently, Greg Norris and Tobi Nieland of QuickDraw Fund Control attended the annual California Bankers Association (CBA) conference. One of the biggest topics of discussion was about how well the housing market is expected to do in 2017.
Mark Boud, Chief Economist, Principal of Real Estate Economics and Senior VP of Metrostudy, a Hanley Wood company, was one of the presenters at the conference. He is an industry leader when it comes to analyzing residential and commercial real estate markets throughout the United States. Boud is also a popular public speaker who has been quoted in publications such as Forbes, The Wall Street Journal and USA Today.
At this conference, Boud presented Metrostudy’s 2017 Housing Market Forecast and shared many great insights. First, he discussed pent-up demand.
“Pent-up demand for new housing is far higher now than in the boom of 2005,” said Boud. “There is no way to prevent the build-up of pent-up demand. Also, there is a 4.5:1 ratio of jobs to homes being built, when the norm is typically 1.1:1.”
The Housing Market Forecasts looks at a variety of economic indicators and measures year-over-year trends that affect the housing market. It shows that job growth has been strong in the past six years, but is slowing down slightly. The industries with the best employment growth in 2016 have been professional and business services, transportation, trade and utilities, education, health services, leisure/hospitality, construction, government and financial activities.
The median household income continues to rise steadily. It is predicted to rise from $56,040 in 2016 to $65,140 by 2021. As a result, consumer spending is also continuing to rise. Mortgage interest rates have continued to trend downward, but are expected to rise a little with inflation. Single- and multi-family housing starts will also continue to increase at strong rates along with new home sales. Housing demand will continue to exceed supply, which will drive home values upward.
“For the next five years, we will be in stable market conditions,” said Boud. “Most banks are either buying or selling, and that won’t stop anytime soon. Building permit activity is going up. In five years, it will still be 40% below the 2005 peak.”
For Californians, true price appreciation is going up, as well as the median annual home price. Housing demand in California will continue to expand while supply remains low. That will lead to more residential development and metro expansion. Boud also predicts that there will be a boom in the Inland Empire region of Southern California.
All signs are pointing to increased activity in the entire housing market, especially with new home construction. This is great news for QuickDraw Fund Control and our lender clients. There will be a lot of fantastic opportunities ahead in 2017 and the years to come. We’re excited to be a part of the growth and prosperity in the housing industry.