Trends in the housing market will take a “new stage” in 2017, one on which millennials, the suburbs and Trump all play a starring role, a recently released forecast expects. The portal’s top five predictions for the upcoming year:
1. Home values will grow 3.6 percent in 2017. National home values have risen 4.8 percent so far in 2016.
2. Cities will focus on denser development of smaller homes close to public transit and urban centers.
3. More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics in the U.S.
“Renters should have an easier time in 2017,” says Svenja Gudell, Zillow chief economist. “Income growth and slowing rent appreciation will combine to make renting more affordable than it has been for the past two years.”
4. New-home buyers will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-Elect Trump.
“There are pros and cons to both existing homes and new construction, and the choice for homebuyers can often be difficult,” says Gudell. “For those considering new construction in 2017, it's worth considering the added cost that may come amidst ongoing construction labor shortages that could get worse if President-Elect Trump follows through on his hardline stances on immigration and immigrant labor. 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.”
5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing—putting them further from adequate public transit options.
“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,” says Gudell.