The election of real estate magnate Donald Trump as president likely will bring some dramatic changes in 2017 for the housing industry, which saw healthy increases in values this year thanks to low interest rates, lower gas prices, stronger wage growth and millennials entering the market. According to MarketWatch, here are five things to watch for in real estate in 2017.
Drones
Commercial use of unmanned aerial vehicles (UAVs), or drones, in 2017 has been cleared for takeoff by the Federal Aviation Administration, and the use of drones by the real estate industry likely will expand dramatically next year. While the use of drones to create flyovers of properties for real estate agents began to rise this year, home buyers and sellers will be able to use them as well by next year, as operators will no longer need a commercial pilot’s license to fly. However, some flights will need the FAA’s or local tower permission, along with a flight plan filed online. Prices for high-quality drones also are expected to drop to as little as $500, although drones with higher-end features — such as gyro-stabilized platforms that help steady the video images — still will still run $1,000 to $1,200.
Not ‘mixed-use’ but ‘surban’
There’s been plenty written about the move from suburban-style sprawl to denser communities of different housing arrangements, such as town houses, apartments and single-family homes, together in the same neighborhoods. In 2017, look for a new name for it: “surban” — a blend of urban and suburban living. More existing suburban neighborhoods are adding urban amenities so people can live, work and play right outside of the core part of the city. Nearly 80 percent of residential growth is expected to occur in suburban communities during the next 10 years — up from 71 percent from 2010 to 2015 — compared with just 15 percent for “urban” areas through 2025.
Forget the starter home, millennials want the move-up property
More millennials — roughly, those born between the early 1980s and the late ’90s — are expected to buy a first home in 2017, according to the National Association of Realtors (NAR). Many of those buyers have saved enough to go with something more than a condo unit or a starter home, says Jessica Lautz, managing director for research at NAR. And with the markets doing so well, and interest rates as low as they are, millennials who have paid down their student debt and built up their cash may be in a position to buy more house than real-estate agents might think, she adds. Indeed, the NAR notes that in 2016, 17 percent of buyers under 35 were able to save enough for a down payment for a home within a year, compared with 14 percent of all age groups. And though it was lower than all other age groups, 37 percent of buyers ages 35 and younger said they were able to save enough for a down payment within six months, compared with 46 percent of all other buyers.
How Trump’s win could change real estate
Fears of recession could grow with a likelihood that Trump would cut government spending dramatically in his first year, and stock-market uncertainty increasing over just how his presidency will begin. As such, another year of low interest rates could be in the cards. Many experts see a Trump presidency being good for the housing and mortgage markets in the long term. Commitments to bringing regulatory relief — and regulatory certainty — to the financial-services industry should make more credit more available to average home buyers who have been locked out of the market by today’s tight credit standards. As a result, home buying should remain strong in 2017, which is good news for a market with low inventory.
Start thinking about Generation Z
It won’t be long before Gen Z reaches the market. They’re teenagers now, but this demographic is almost on the cusp of being able to buy homes, with the first Gen Z–ers reaching their 18th birthdays in 2017. According to the NAR, Gen Z will come of age with low interest rates, better job prospects and higher wages to help cushion the high costs of college education.