Shore Builders Association Bulletin Board Magazine 2017 Volume 1

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Bulletin Board | 9 | Bulletin Board | 10 |
Q3: What will interest rates
(and mortgage rates)
do in 2017?
Answer:
Interest rates are still near 30-year lows.
Recent increase, but still very low by historical
standards. Only possible direction is: UP!
But: how much and when?
Outlook: labor market and financial market
ended year on high notes, new administration
is pro-growth, expectations of continued
economic traction. All indicators point towards
increases…but how much and when?
Q4: What will housing starts
do in 2017?
Answer:
Starts are trending upward, but multi family
has exhibited more growth than single-family.
Post-recession shift towards renting and urban
locations. The ~1.16m starts in 2016 will still
be 13th lowest year since 1959. Historic
average is 1.5m per year.
Outlook: demographics (i.e. millennials) and
economics (growth) favor continued recovery,
but will be offset at least partially by higher
i-rates and decreased land supply.
Q5: What Will Happen With
Foreclosures in 2017?
Answer:
New Jersey’s foreclosure rate continues to
remain the highest in the country, and has
recently trended up. Of the top five counties
in NJ with the highest foreclosure rate, four
of them are located in South Jersey, with an
average foreclosure rate of 1 in every 339
homes. This is well above the statewide average
Economic Forecast Continued
of 1 in every 59 7 homes. Is a holdover—
hangover? —from the housing bubble: NJ
has the longest foreclosure process
of any State in the US!
Outlook: Will improve, but will also remain
areal obstacle to a full recovery.
Q6: What Will Happen With
Inventories in 2017?
Answer:
Inventory down 9.1% YoY and MSI
is currently at 4 months. 5-7 MSI is
onsidered a “balanced” market. We are
currently in a Seller’s Market: Demand>
Supply Why? : 1) Conversion of owner-
occupied homes to rentals; 2) Many boomers
are aging in place and not moving
Outlook: Demographics are against
improvement, but market forces
favor increase.
Q7: What Will Happen With
House Prices in 2017?
Answer:
House prices are recovering, but at a sluggish
rate. Pre-recession: 5-7% Post-recession: 3-5%
Is 4% the new 6%? NJ is under performing
both US and other large metro areas
in post-recession period.
Outlook: Low inventory and below-average
starts favors further upward pressure on prices,
but other fundamentals favor a softening
in 2017.
Q8: What Will New Home
Sales Do in 2017?
Answer:
New home sales trending upward, but still
below historic levels.
Outlook: demographics (i.e. millennials)
and momentum favor continued recovery,
but face challenges from higher i-rates
and decreased land supply.