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How is the Current Housing Supply Affecting Homeowners?

December 21, 2016

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It might be hard to find the right home in 2017.

In addition to rising interest rates, home demand is continuing to outpace the supply of available housing, according to Fannie Mae’s November Economic Developments report.

In the report, Fannie Mae noted that the number of existing home sales declined 6.8 percent in the third quarter compared to the same quarter in 2015, which makes it the sixth consecutive quarter of decreases. This drop is also the largest since the second quarter of 2013, the agency noted.

The low demand and high supply is driving the median price of homes up in many markets. In Washington state for example, home and condo prices in November were up 15 percent compared to this past year in several counties, the Puget Sound Business Journal reported. This is making home ownership inaccessible to some buyers right now, the source explained. But there is good news on the horizon as 2017 approaches.

“I believe home ownership rates will increase in 2017,” E. Thomas Booker III, managing director at the business advisory firm The Collingwood Group, told DS News. “Continued job growth, sustained income gains, and the expectation of increased economic activity will tempt many who have a bias for owning, but have endured years of steadily increasing rental rates, to a decision point.”

Many experts are projecting that millennials will be the driving force behind increased home ownership in 2017. Now that many people have recovered from the recession eight years ago, they are looking to buy homes now, according to the International Business Times. Despite this optimistic outlook, it is uncertain whether the supply of new homes will be able to keep up with the robust demand, the source noted. Right now, it is projected that available housing will fall 2.8 million homes short of meeting demand in the new year, the International Business Times reported.

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