In 2017, recent trends will reverse course as the housing market's economic recovery enters a new stage, according to an analysis by Zillow. Renting will become more affordable, more Americans will drive to work, and the homeownership rate will bounce back from historical lows.
Millennials will play a significant role in increasing the homeownership rate. Nearly half of all buyers in 2016 were first-time buyers, and millennials made up over half of this group of buyers.
Zillow's 2017 housing market predictions
- Cities will focus on denser development of smaller homes close to public transit and urban centers.
- 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 of the United States.
- Rental affordability will improve as incomes rise and growth in rents slows.
- 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 labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.
- 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.
- Home values will grow 3.6 percent 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 percent so far in 2016.