Looking ahead to 2017, most forecasts for the real estate industry are positive ones. Increasing rent prices, wider availability of programs for first-time buyers, and a Real Estate mogul, Donald Trump as President-elect have industry experts borderline giddy over the year ahead. However, obstacles remain when it comes to convincing reluctant buyers of their options and the reality of deregulation within the banking industry.
Perhaps the biggest cause for optimism among real estate industry gurus is the election of real estate mogul Donald Trump as President of the United States. Given the President-elect’s background in real estate, many experts expect him to be sensitive to regulations that may stifle its growth, including lending requirements and environmental regulations.
A repeal of Dodd-Frank, as the President-elect has pledged, may open some new opportunities to lenders, particularly small banks that have been disproportionately affected by the regulations. If small banks were open to make more loans, there could be a boost in home building activity, which would help to correct the inventory imbalance that is driving up home prices in several markets. However, other experts warn that it might not be as simple as the campaign promises would suggest to dismantle the bank reforms, most of which have already been implemented.
Although the Federal Reserve raised interest rates in December of 2016, experts suggest that the higher rates will be balanced by looser lending standards, which should make credit more widely available. Nonetheless, the increasing rates may encourage buyers who have been on the fence to purchase while they can take advantage of cheaper loans. These first-time buyers particularly stand to benefit: starting in 2017, Fannie Mae and Freddie Mac will begin backing larger mortgages than they have previously, which will open new opportunities for prospective buyers who live in expensive housing markets.
And those opportunities will likely spur many millennials, who have been sitting on the sidelines, to finally purchase their first home. Although a vast majority of young adults say they wish to own a home one day, surveys have shown that many of them feel that they are unable to afford the down payment, or that their credit won’t pass the current lending standards. As this much-hyped demographic enters their thirties – the median age group for real estate purchasing – the increased options for first-time buyers may convince them otherwise.
The biggest obstacle seems to be education: a 2015 survey by Fannie Mae found that 73% of young adult renters were unaware of lending options that require down payments as low as 3% to 5% of the home’s purchase price. In addition, stronger wage growth for young professionals means that more of them have the extra income to save for a down payment.
For real estate agents, one of the biggest factors that will shape their business in 2017 is the increasing use of technology. Drones, in particular, provide a wealth of possibilities for agents who are looking to showcase their properties from a new perspective, or to make sure that their listing photos or video truly do their larger properties justice. As the FAA continues to clarify regulations and ease restrictions for commercial drone use, more amateurs will be able to use drones to record photos or video. Virtual reality technology also stands to become a game-changer – imagine VR home tours for buyers who can’t attend an open house!
The increasing supply of information available to consumers means that agents must continue to offer prospective buyers or sellers a high level of information, open communication, and stellar customer service. If uncertainty or misinformation is a barrier to homeownership, an agent is offered an opportunity to supply a client with new information about their options, including mortgage products, affordable market