Miss our Spring Housing Briefing this year? We've got you covered. Browse our pictures from the Howard County, D.C., Montgomery County, or Frederick events, and read on for a recap of what the region's leading experts had to say!
In the last few weeks, we gathered some of the top real estate agents in our area for an overview of the economy and spring market from the region's leading housing experts. This year, we're bringing that expert analysis directly to you. Our speakers so far this year included Dr. Anirban Basu of Sage Policy Group and Dr. Terry Clower of George Mason's Center for Regional Analysis. Here's what these economics experts had to say about housing supply, mortgage rates, and the year's housing forecast!
Low inventory has been a frequently-reported phenomenon in the last few years, and according to both of these experts, the problem will likely persist for the foreseeable future. What's putting a damper on supply, you might ask? According to Dr. Terry Clower, high construction costs are one key factor in Greater Washington, hampering new development. This is evidenced in a low percent change in building permits in the DC area, a signal of delayed building starts.
Another trend constraining supply is the construction of multi-family units instead of single-family, according to Dr. Basu. Eager, younger renters have created a market for developers in the near term for multi-family units, but as millennials' priorities change and home prices rise, long-term prospects for single-family, starter units are overwhelmingly positive. 20-somethings are the largest population makeup in America by a long shot, and as quality schools and space for a growing family become a higher priorities, the market for single-family units will be very lucrative. Surprisingly, builders have yet to shift focus.
Both experts agree that mortgage rates remain historically low, but a recent rise from the all-time lows with which we've grown familiar in recent years is posing a problem of perception. Homeowners may elect to remain in their current home instead of moving up to one with better features, for example, Dr. Clower points out. This "in love with their loan, not their home" phenomenon is not always the case, but can constrain supply. Dr. Basu, on the other hand, points out that in the US, there's an incorrect perception among renters that they can't afford a home, and rental units are increasingly meeting housing needs despite an upward trend in rent prices.
Buyers can still get a better rate than their older brother or sister did ten years ago, parents did twenty years ago, and grandparents did forty years ago. The problem is that they often don't know that!
What's ahead for housing? Dr. Basu predicts that rising home prices in some areas of Maryland (i.e. Howard County) may drive younger renters to the take the ownership plunge, while Dr. Clower predicts that rising rates may impact construction and inventory negatively in D.C. In terms of the economy overall, both experts note that consumer confidence, spending, and job growth are strong, and that these are positive signals for housing demand through 2017.
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