By Barry Potoker
The real estate market has seen a steady and solid activity pace over the last 12-plus months, including an especially renewed upturn in new home construction.
The Saratoga Builders Association is coming off one of its most spectacular Showcase of Homes event this past fall. The event had 19 new properties on display in Saratoga County, with nearly 4,000 visitors touring them. Those are very healthy business and consumer signals.
The 16 award-winning builders (and we have some of the most talented in the nation) were thrilled and optimistic with the enthusiasm in their new construction and developments. In fact, the show generated significant new home sales, lot holds and interested new home buyers.
In the end, the annual Showcase of Homes event was a success. We were proud and fortunate to present a check for $70,000 back to local designated charities Rebuilding Together Saratoga County and Habitat for Humanity of Northern Saratoga, Warren & Washington Counties. This brings the total that our organization has donated over the past 21 years to just over $1 million.
The Realtor.com 2017 national housing forecast is predicting a slight slowing, compared to the last two years, across the majority of economic indicators. Home prices are anticipated to increase 3.9 percent and existing home sales are forecasted to increase 1.9 percent to 5.46 million homes. New home sales, however, are expected to grow 10 percent, while new home starts are expected to increase 3 percent.
Popular thinking is that interest rates will begin to rise in 2017 due to a variety of reasons, but primarily from the Federal Reserve’s tightening. According to Forbes magazine, “Historical patterns show that in the first and sometimes second year of rising mortgage rates, housing starts continue to rise, fueled by strong economic growth. Eventually, though, higher interest rates prevent further improvement in the housing market, and sometimes a contraction.”
Here are a few key predictions for 2017 from Realtor.com:
Millennials and boomers will move markets. In 2017, the U.S. real estate market will be in the middle of two massive demographic waves that will power demand for at least the next 10 years. Millennials and Baby Boomers, the two largest American generations in history, are both approaching life stages that typically motivate people to buy a home: marriage, having children, retirement, and becoming empty nesters.
Price appreciation will slow down. Nationally, home prices are forecast to slow to 3.9 percent growth year over year, from an estimated 4.9 percent in 2016. Prices are still likely to go up at an above-average pace as long as supply remains so tight, but the inventory problem is not going away.
The inventory of homes available for sale is currently down an average of 11 percent year over year in the top 100 U.S. metropolitan markets and the conditions limiting home supply are not expected to change in 2017.
Overall, according to the Greater Capital Association of Realtors (GCAR), 2016 was a good year for home sellers in the Capital Region. However, as the year comes to a close, area real estate sales remain strong while inventory could use a boost.
Since January 2016, the average number of days a house spent on the market has continued to decrease. Furthermore, sellers are receiving 94.8 percent of their original list price at closing. That is a healthy increase from 92.9 percent back in the fall of 2015. Prices continued to gain traction, however, available inventory continues to decrease.
Inventory decreases and ongoing buyer demand continue to push median prices up. In our area, the unemployment rate fell to 3.9 percent last month, from 4.1 percent in November 2015. That figure can only help the real estate market continue a healthy pace into 2017.
In Saratoga County, residential prices increased by 9 percent from last year to an average of $291,825. Closed sales increased slightly by two percent since last year, but new listings were down by seven percent.
“The decline in inventory has been an ongoing challenge for buyers in the market this year,” said Marie Bettini, GCAR president. “However, sellers are often finding themselves in multiple offer situations.”
GCAR believes this to be all welcome news. Just look around our region, especially in Saratoga County, at the multitude of residential and commercial construction projects being proposed and being built. It is and will be exciting to see this growth and positive energy in our local building industry this year.