With a new year comes new predictions for the 2017 housing market. Senior homeowners who have been thinking about taking out a reverse mortgage, but waiting for the right time may be in luck next year if they live in one of the country’s hot housing markets.
If seniors are thinking about taking a reverse mortgage out on their home, certain metro areas are predicted to do better than others in terms of price and sales increases, according to the 2017 Housing and Residential Real Estate Forecast by Realtor.com.
Over the next year, Realtor.com forecasts that Millennials will play as large of a part in the housing market in 2017 as Baby Boomers, with the Midwest continuing to be a popular area among younger buyers looking to purchase homes.
Additionally, although before the presidential election the first-time buyers market was looking up, mortgage rates have now increased and there may be more challenges for those seeking to qualify for a mortgage.
“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016. However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate predication for next year,” Jonathan Smoke, chief economist for realtor.com said in the report.
“With more than 95% of first-time home buyers dependent on financing their home purchase, and a majority of first-time homebuyers reporting one or more financial challenges, the uptick we’ve already seen may price some first-timers out of the market,” he added.
The cities leading the way in the Midwest are Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska; Des Moines, Iowa and Minneapolis. Affordability continues to be strong in these areas.
“This year, average millennial market share in these markets is 42%, far higher than the U.S. average of 38%,” the report said.
Another factor seniors consider when deciding if they want to apply for a reverse mortgage is their home price growth year over year. Of the top 100 largest metro areas in the country, those on the western side of the U.S. are expected to see an average price increase of 5.8% and a sales increase of 4.7% this year, which is much higher than the country as a whole, according to the report.
On a national level, the top 10 housing markets in 2017 with the highest price and sales increase include:
1. Phoenix-Mesa-Scottsdale, Arizona
2. Los Angeles-Long Beach-Anaheim, California
3. Boston-Cambridge, Massachusetts and Newton, New Hampshire
4. Sacramento-Roseville-Arden-Arcade, California
5. Riverside-San Bernadino-Ontario, California
6. Jacksonville, Florida
7. Orlando-Kissimmee-Sanford, Florida
8. Raleigh, North Carolina
9. Tucson, Arizona
10. Portland-Vancouver, Washington and Hillsboro,Oregon
As a group, the top 10 markets exceed last year’s anticipated national growth of 3.9%, but only Los Angeles and Tucson are individually showing higher growth than last year. The group also has affordable rent prices, low unemployment and large populations of millennials and Boomers.
Other cities in the top 100 expected to see higher increases in home sales and prices include Seattle-Tacoma-Bellevue, Washington with a predicted home price increase of 7.4% and an increase in sales by 3.4%, and Salt Lake City, Utah with a price increase of 6.7% and sales increase of 4.7%.
See the full report.
Written by Alana Stramowski