Realtors are true futurists because their antennae are always up to detect early shifts in how the consumer is spending and how optimistic (or not) they are about the future.
After wading thru reams of national and regional real estate data, I’m positive these 3 trends will have the most juice for 2017 and beyond:
1. 2017 will be the year of first time homebuyers – with millennials leading the pack
2. The suburbs are back – esp. those with distinct, niche neighborhoods and urban amenities
3. Skilled labor shortages remain the biggest drag on growth
Read on below for more details on each trend as well as the hottest markets for 2017.
Big Increase In First Time Homebuyers For 2017/ Affordability is Key
- 61% of first time buyers are under 35 i.e. millennials (Source: realtor.com)
- Top reasons cited by millennials for buying include getting married/moving in with a partner, tired of their current living space, and planning to increase family size.
- First-time buyers will make up 52% of prospective buyers in 2017 – up from 33% in 2015. (Source: Realtor.com)
- North Texas/Dallas is an extremely hot market with house prices up more than 40% in the last four years fueled by a surge of younger buyers.
- Millennials have skipped past traditional starter homes, buying first homes that are about as large and as expensive as the homes purchased by members of older generations (Source: Bloomberg)
- 43% of first time homebuyers prefer suburban locations for their safe neighborhoods, privacy and space for growing families.
- Suburban areas are also adding urban amenities so that there’s an environment where people can live, work and play right outside of the core part of the city.
- Competition will be fierce for affordable starter homes in the suburbs (37% say the largest impediment to home ownership is the down payment and 30% cited finding a house within their budget).
Skilled Labor Shortage Is A Drag On Growth For Both Big and Small Developers
- Companies are struggling to find qualified workers – as a result, project schedules are longer and costs are higher.
- The labor shortage is the result of millions of workers leaving the industry during the recession, baby boomers aging out of the industry, millennials failing to enter the industry at a quick-enough pace, and immigration trends resulting in fewer workers from Mexico.
According to the Urban Land Institute’s (ULI) and PwC’s latest report, “Emerging Trends in Real Estate® 2017,” here are the ten “gateway” markets that stand above the rest:
- Austin, Texas
- Dallas/Fort Worth, Texas
- Portland, Ore.
- Seattle, Wash.
- Los Angeles, Calif.
- Nashville, Tenn.
- Raleigh-Durham, N.C.
- Orange County, Calif.
- Charlotte, N.C.
- San Francisco, Calif.
Five up-and-coming markets, in addition to the top 10, are also on the rise, according to the report:
- Columbus, Ohio
- Richmond, Va.
- Pittsburgh, Pa.
- Charleston, S.C.
- Salt Lake City, Utah