Guide: US Housing Market Predictions and Real Estate Forecast

This year is upon us, and for a while no one knew quite what to make of it. The somewhat unexpected election of President Donald Trump had many people wondering what the next four years would bring.  

With a crash just a few years ago, the US housing market was one such group.

There are many factors that influence real estate market trends, and the president is certainly one of them. Campaign promises and political leaning all factor into house price predictions and influence the housing market forecast.

President Trump’s term as commander in chief of the United States has just begun, so it’s early yet. He’s already taken an abundance of action toward his campaign promises, which suggests he will continue to do so. This means the housing market trends will likely be impacted.

A single term for president is four years, meaning the housing market forecast for the next 5 years could be predictable, but house price predictions for the next 10 years could be less reliable.

There are many players that influence the US housing market. Recent statements from the federal reserve suggest potential action.

Until the transitioning government finds its groove, housing market predictions will likely vary considerably.

In this housing market forecast guide, we take a look at possible scenarios regarding housing market trends and the elements that could impact the US housing market.

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History of the US Housing Market

To better understand the real estate market forecast looking forward, it is wise to first look back at the recent house price trends.

Since 2012 the market has been rising, with 2016 showing continued growth in many cities. These statistics are reported in the S&P Corelogic Case-Shiller National Index.

This index has been one of the most trusted sources of US home equity since 1957. In other words, it’s a strong predictor for the housing market forecast. It’s hugely helpful in gauging the US housing market.

The S&P CoreLogic Case-Shiller National Home Price Index has risen by about 5.5% annually for the past 2.5 years.

Recently, the index has risen steeply enough to set a new all-time high.

Since then, the steep rise appears to be decelerating, with slowed increase percentages in December of 2016.

If these real estate market trends are any indication, the housing market might finally be stabilizing.

Of course, a real estate market analysis can always lead to varying opinions, depending on who you ask.

Housing Market Trends to Expect

If the US housing market is stabilized, the house price trends become easier to predict.

Generally, you can expect only moderate price growth. Sales will be in the fair to ample range.

It’s possible that property values could take a small hit in some areas over the next year or so. House price predictions for the next 10 years can be made in very general terms: one mortgage expert suspects property will continue to increase in value over the long term.

Another expert from echoes this sentiment. The housing market forecast for the next 5 years might not see tremendous price growth. The value increase will likely come to those who can hold their property longer.

No one can know for sure, but that doesn’t stop everyone from making predictions.

A good place to look is within the cities showing the strongest growth in year-over-year gains.

us housing market

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Cities with the Largest Growth in House Price Trends

The S&P CoreLogic Case-Shiller National Home Price Index includes a composite of 20 cities. The three cities in the US housing market that reported the highest gains year over year were:

  • Seattle
  • Portland
  • Denver

Seattle reported the highest year-over-year gains, coming in at a 10.4% increase. Portland was just behind Seattle, at 10.1%. Denver saw an 8.7% increase.

In the year ending November 2016, eight cities of the 20 reported a greater price increase than in the year ending October. This means house price trends were still trending upward in the eleventh month, the same month as the US election.

The impressive increases slowed in December 2016. Potentially from the cold, potentially from the uncertainty regarding the new administration. It’s hard to say for sure. It could be indicative of a stabilizing US housing market.

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Housing Market Forecast

Mortgage Costs

Mortgage costs have remained relatively low in recent years—that might be coming to an end.

In their last meeting in 2016, the federal reserve voted to raise the key interest rate for the first time that year.

Granted, the increase was marginal. The average homeowner would barely feel the raise. The fed only increased the short-term interest rates to a range of 0.50% and 0.75%.

The hike in mortgage rates looks positive for housing market predictions.

House Price Predictions

The rising mortgage rates means the fed is finally confident in the US economy. Mortgage rates were kept low as a way to make it easier for prospective homeowners to borrow money in a weak economy.

Apparently, the weak economy has flexed enough to bring the fed some confidence.

The housing market predictions will continue moving upward as the job growth continues and the economy continues to show signs of good health.

Many homeowners are looking to lock in their rates now while it’s as low as it’s likely to be, provided the economy stays strong.

The fed is expected to raise the interest rates as many as three more times in 2017. A real estate market analysis will reflect this scrambling trend.

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Housing Market Forecast—Lessons from Abroad

The US housing market forecast isn’t the only real estate market forecast worth paying attention to. A real estate market analysis of both London and England as a whole can provide insight into the tumult of housing market trends.

Premium properties in London have fallen by more than 8.5% over the course of 2016. The average annual house price growth for London homes in 2016 was 3.7%. That means, for the first time in eight years, it had fallen below the UK average (4.5%).

The decreasing 1.5 million euro (and up) house price trends for London are blamed largely on the stamp duty surcharge instituted in April of 2016. Anyone buying a second home, or a home they intend to rent, that costs 1.5 million euros or more has to pay a 15% surcharge.

Impact of Regulatory Change on Housing Market Trends

The surcharge added in April only increased the rate by 3% (up from the standard rate or 12% in million-euro homes). Three percent doesn’t seem like much on paper, but experts interviewed by the BBC claim the surcharge has impacted the market more strongly than the Brexit vote.

Another BBC-interviewed expert claimed the housing market made a remarkably quick recovery after the Brexit price predictions

Image courtesy of

From the outside, it might seem backwards. If you made your own housing market predictions, would you have thought a 3% surcharge increase would have a more lasting impact on the market than England leaving the United Kingdom?

Housing market forecasts made for the US housing market are similarly unpredictable. The best you can do is arm yourself with knowledge. A careful look at house price trends of the past, and a diligent look at litigation and regulations slated for the future is your best bet.

There’s no way to make a surefire housing market forecast, but that doesn’t mean different real estate market forecasts won’t be partially or completely correct.

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How to Decipher the Housing Market Predictions

Two Sides to Every Real Estate Forecast

A real estate market analysis should never be taken as advice that’s written in stone. You could benefit or feel negative impacts of real estate market trends depending on your situation.

An increase in mortgage rates is a sign of a strong US economy, and a stabilizing US housing market. It means borrowers can afford to pay more to borrow the money they need in order to secure a house.

It can also deter some buyers. After all, no one actually wants to spend more money.

An economy that is actually stronger might mean more lending opportunities and prospective homeowners who aren’t as reserved about taking the plunge. Favorable housing market predictions make it easier to trust your home-buying decision.

The Presidential Agenda Impact on Housing Market Predictions

If the policies of the next administration cut regulations on the housing market, we could see an increase in home builders. House price predictions could show favorable conditions for both buyers and builders—or we could see inflation without the necessary correlation in economic growth.

If inflation outpaces economic growth, the federal reserve will have to step in with even more rate hikes to put out the fire. If the economy can’t keep up, US housing market could go bust—again.

If the deregulation from the Trump administration leads to faster economic growth, then increased interest rates won’t negatively impact the real estate forecast. The good will likely outweigh the bad.

It is impossible to make surefire housing market predictions. Even the most assured housing market forecast for the next 5 years is tenuous at best. A new election will have taken place.

House price predictions for the next 10 years are even more tenuous. A new administration will be in control, either for its second year or sixth year depending on how the elections go.

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Conclusion: US Housing Market

There’s no way to know for sure how accurate a housing market forecast will be. There are important variables changing constantly. Even the most well-researched housing market predictions can miscalculate actions and impacts.

Even though it isn’t an easy market to navigate, it can be worthwhile. If you buy at the right time and sell at a great time, you could stand to make quite a bit of money.

A popular consensus based on the current housing market forecast is that the long-term play is the winning play. You will have a hard time making strong returns if you look to buy and sell quickly, as the real estate market trends sit right now.

The only certainty is that the future holds changes for the US housing market.

We’ll learn firsthand whether the regulatory changes planned by the current administration will lead to economic growth or a downturn. Will a real estate market analysis support buying a home? Or cutting and running before it’s too late?

There’s always the possibility that sweeping changes won’t have the intended impact. Or any impact at all. Economic predictions tend to treat people as rational thinkers. We are not always rational thinkers. We can be emotional thinkers, impulsive actors, stubborn buyers.

With so many gears and cogs at play in the US housing market machine, we’ll only know what tomorrow holds at end of day tomorrow.

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