Biggest Threat To Real Estate In 2017

Performance Property Real Estate Question

Q: Gerald, I keep hearing that we may be in another real estate bubble and everyone’s talking about interest rates going up, what should I be looking out for in 2017? Jasmyn, Bowie, MD

A: Hi Jasmyn, thanks for your question and happy new year.  There are plenty of real estate trends on the horizon to keep an eye on but one of the biggest challenges to real estate in 2017 is housing affordability. 

Home prices on average nationally are rising at 5 percent annually, which is double the rise in income–as I’ve said before, when home price increases outpace personal incomes, there’s only a matter of time before home prices fall because people’s incomes simply can’t support those inflated prices.   

The National Association of Home Builders (NAHB) noted a few months ago that only 62 percent of all new and existing homes sold in the second quarter 2016 were “affordable”.  Population growth, rising land and building costs, and personal income stagnation suggests that housing affordability will continue to be one of the main real estate challenges in 2017 and beyond.   

Thanks for your question, Jasmyn. 

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