Home ownership rates in the US are expected to bounce back in 2017 and renting will become more affordable but Trump could push up housing cost, says a new analysis.
The outlook report from real estate firm Zillow predicts that recent trends will reverse course as the housing market’s economic recovery enters a new stage. Renting will become more affordable, more Americans will drive to work, and the home ownership rate will bounce back from historical lows.
It also says that millennials will play a significant role in increasing the home ownership rate as nearly half of all buyers in 2016 were first time buyers and millennials made up over half of this group of buyers.
The firm expects that cities will focus on denser development of smaller homes close to public transit and urban centres but more American will drive in from suburbs where housing is affordable for work despite these kind of urban developments.
However, buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labour shortages, which could be worsened by tougher immigration policies under President elect Trump.
Home values will grow 3.6% in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8% so far in 2016.
‘There are pros and cons to both existing homes and new construction, and the choice for home buyers can often be difficult. For those considering new construction in 2017, it’s worth considering the added cost that may come amidst ongoing construction labour shortages that could get worse if President elect Trump follows through on his hard line stances on immigration and immigrant labour,’ said Zillow chief economist Svenja Gudell.
‘A shortage of construction workers as a result may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices. Those looking for more affordable housing options will be pushed to areas farther away from good transit options, in turn leading more Americans to drive to work,’ she explained.
‘Renters should have an easier time in 2017. Income growth and slowing rent appreciation will combine to make renting more affordable than it has been for the past two years,’ she added.
