As we approach the last calendar quarter of the year, many home buyers in the East Bay are already looking ahead to 2017. And they share some of the same questions.
What will the East Bay real estate market be like in 2017? Will it be a good time to buy a home? What are house values and mortgage rates expected to do over the next year?
Here are three East Bay housing market predictions and forecasts for 2017. These are some trends we might see over the coming months.
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Three East Bay Housing Predictions That Might Come True in 2017
Home buyers across the East Bay could have more inventory to choose from in 2017, compared to the last couple of years. This could slow the rapid home-price appreciation we’ve been seeing. But watch out for rising mortgage rates. Several sources have predicted a gradual rise in rates through the end of next year.
Let’s take a closer look at these East Bay housing market predictions for 2017:
1. East Bay buyers could have more homes to choose from in 2017.
Inventory has been the big real estate story of the last few years — or rather, a lack of inventory. A shortage of homes for sale, coupled with strong demand, have led to tremendous home-price gains in the last couple of years.
It has also led to fierce competition among buyers. In short, there are plenty of buyers in the market, but not enough properties to go around. Bidding wars and offers above the asking price have been common trends over the last two years.
But there are signs that the inventory crunch could be easing. Spend some time driving around the East Bay, and you’ll probably notice a spate of new-home construction in the area.
August to an August 4 article in The Wall Street Journal:
“Over the past year, the East Bay, which stretches 10 to 60 miles to the east of San Francisco and Silicon Valley, is tied for the fastest growth in new-home developments among major U.S. markets. Sacramento came in at number three, according to figures from John Burns Real Estate Consulting.”
A recent report from the California Association of Realtors (C.A.R.) also showed signs of inventory growth. According to C.A.R. data, the months’ supply of inventory for single-family homes in the nine-county Bay Area rose to 2.6 months in July 2016. That was a slight uptick from June (2.3 months), and a significant increase from July of last year (1.8 months). For-sale inventory rose in all nine counties from July 2015 to July 2016.
According to C.A.R. president Pat Zicarelli:
“Some regions, such as the Bay Area, are seeing an uptick in inventory as high prices are motivating sellers to list their properties for sale. While this could ease the inventory [situation] somewhat, supply remains tight, and low affordability is expected to be an issue in the short term.”
Inventory growth could make it easier for buyers to find suitable homes next year, in the East Bay housing market and elsewhere in the region. It could also help create a healthier balance between supply and demand, which would be good for long-term market stability.
This trend ties into our second East Bay housing market prediction for 2017. If the supply situation does improve, we could see slower home-price appreciation next year. This is something many housing analysts seem to agree on.
2. Home prices expected to continue rising in 2017, but more slowly.
Home values across the Bay Area have skyrocketed over the last couple of years. In fact, prices in the region are higher now (as of August 2016) than ever before. They’re even higher than they were during the last housing bubble, and that says a lot.
But predictions from housing market analysts and economists suggest that East Bay home prices could rise more slowly in 2017, compared to the last couple of years. This is especially true at the upper end of the pricing spectrum. There have been many stories about the luxury home market slowing in the area.
This mirrors housing market predictions for the nation as a whole. The general consensus among economists is that home prices will rise more gradually in 2017, compared to previous years. Some have even predicted that house prices nationwide will begin to decline in 2017. That remains to be seen. The point is, there is a growing number of voices that suggest home-price appreciation will slow over the coming months.
As noted in a recent article on our blog, the 12-month price predictions for many East Bay cities are a fraction of the gains recorded over the last year.
3. Mortgage rates might rise gradually, according to multiple sources.
Here’s another prediction that could affect the East Bay housing market in 2017. The Mortgage Bankers Association (MBA) expects mortgage rates to rise gradually between now and this time next year. Freddie Mac expects the same.
Here is the MBA’s quarterly outlook for the average rate on a 30-year fixed home loan:
- Q3, 2016: 3.5%
- Q4, 2016: 3.7%
- Q1, 2017: 3.9%
- Q2, 2017: 4.1%
- Q3, 2017: 4.3%
- Q4, 2017: 4.4%
This is something we’ve reported on before, at the beginning of August.
So there you have them, a few predictions for the East Bay real estate market in 2017. Just bear in mind these forecasts are the equivalent of an educated guess. Projections are based on a variety of factors, many of which are constantly changing. So it’s just not possible to predict future housing conditions with complete accuracy. With that being said, it always helps to know what the experts are thinking!
Disclaimer: This story contains forecasts and predictions for the East Bay housing market as well as the broader Bay Area. Such forward-looking statements were provided by third parties not associated with our company. We have simply compiled them as a service to our readers.