Case Shiller Home Price Index – Predictions for 2017

Case Shiller Home Price Index – Predictions for 2017

S&P Case Schiller Homes Prices – Update on Housing 2017

Over the last month, the mood of homebuyers has been volatile, but it looks like we’re settling into a more stable period for home prices. Limited residential property, improving employment picture, and President Trump’s commitment to bring America back to its former glory are fuel for the price fire. What’s dampening that price flame is that prices are too high for Millennials (thus powering up the rental property investment market) and high mortgage rates.

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. Interest rates are expected to reach 4.5 percent due to higher expectations for inflationary pressure in the year ahead — Realtor.com Research

Case-Shiller reports a spate of very positive news regarding the state of the US economy and the housing outlook for 2017 to 2020.  Housing is boosted by positive indicators coming from two separate reports published on Trading Economics, include:houseconstruction

  • US housing starts rose to a 9 year high in October
  • US consumer sentiment rose to a 6 month high
  • US durable good orders rose
  • Job vacancies to fall 500,000 by 2020
  • US GDP will rise 2 Trillion by 2020

From the chart below, the Case-Shiller Home Price Index, building permits, housing starts, home sales, will rise slightly next year and significantly grow to higher levels in 2020. Home prices will rise another 10% by 2020 according to their forecast.

latest-case-schiller-predictions-2017

Screenshot courtesy of Trading Economics

Case-Shiller also sees the Fed raising interest rates and the US inflation rate will rise. These estimates may not take into account the intent of the Trump government.  They see the US trade deficit worsening each year to a $10 billion imbalance by 2020. Perhaps with a growing economy, this stat will be moderated.

And from a reuters news report on the economy, Joel Naroff, chief economist at Naroff Economic Advisers is quoted as saying, “Everything seems to be moving in the right direction in the economy … The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing.”  That would mean he expects the Fed to raise interest rates, and that would push the US dollar to further highs.

Overall, it’s a good report that has something for consumers and entrepreneurs and business.  Read the full forecast here.

The US housing market 2017 report is positive and this report from the Urban Land institute is positive too. Sure there are variables, especially in different regions and cities across the US, yet a lowered deficit sends a positive message to startups and small businesses that US businesses will have an easier time competing in the US. Looking to invest in rental income property in 2017?

Best Cities to Invest?

Cross reference this compiled list of cities with a previous post on best cities 2017 to invest in rental property. In this chart with data from Realtor.com and Kiplinger, I’ve highlighted what might be the best cities to discuss with your real estate investment advisor. I’m not advising anything, just to point out the advantages of diversifying your investment portfolio to cities that are strong and ones that could become strong. Places like Springfield MA, Sacramento CA, or Detroit might pay off in 2020 to 2025. For rental income, Silicon Valley, Los Angeles, San Diego, and Boston might be best picks. It might be a case of the usual suspects, but start here, work your way to the best zip codes and neighborhoods, types of house, employment growth, and migration patterns of Millennials, and you may have yourself a winner (real estate investment). Who knows which cities will rule after 4 years of the Trump overhaul of the US government and US economy?

Rank City Price Rise Sales Growth Average Home Price 2015 – Kiplinger
1 San Francisco-Oakland-Hayward, CA 8.41% 1.17% $700,000
2 San Jose-Sunnyvale-Santa Clara, CA 8.26% 1.26% $816,000
3 Seattle-Tacoma-Bellevue, WA 7.36% 3.41% $370,000
4 Sacramento–Roseville–Arden-Arcade, CA 7.18% 4.92% $305,000
5 Los Angeles-Long Beach-Anaheim, CA 6.90% 6.03% $530,000
6 Salt Lake City, UT 6.66% 4.67% $248,500
7 Portland-OR-Vancouver-WA 6.55% 5.02% $289,900
8 San Diego County, CA 6.47% 4.89% $460,000
9 Denver CO 6.41% 3.96% $302,000
10 Providence-RI Warwick, MA 6.31% 4.09% $224,575
11 Stockton-Lodi, CA 6.12% 4.01% $267,000
12 Tucson, AZ 6.10% 5.47% $160,000
13 Boston-Cambridge-Newton, MA 6.09% 6.32% $350,000
14 Phoenix-Mesa-Scottsdale, AZ 5.94% 7.24% $205,000
15 Atlanta-Sandy Springs-Roswell, GA 5.93% 2.67% $180,000
16 Grand Rapids-Wyoming, MI 5.77% 4.16% $140,000
17 Orlando-Kissimmee-Sanford, FL. 5.69% 6.10% $170,000
18 Philadelphia, PA 5.54% 3.08% $252,800
19 Greensboro-High Point, NC 5.50% 3.56% $118,500
20 Bakersfield, CA 5.26% 4.49% $182,500
21 Oxnard-Thousand Oaks-Ventura, CA 5.19% 5.35% $507,500
22 Richmond, VA 5.18% 2.57% $224,000
23 Detroit-Warren-Dearborn, MI 5.17% 6.22% $147,000
24 Provo-Orem, UT 5.16% 5.84% $229,950
25 Las Vegas-Henderson-Paradise, NV 5.06% 4.57% $193,700
26 Greenville-Anderson-Mauldin, SC 5.03% 3.61% $162,700
27 Sarasota-Bradenton, FL 5.00% 5.37% $192,000
28 Riverside-San Bernardino-Ontario, CA 4.98% 6.88% $276,000
29 Tulsa, OK 4.90% 4.01% $124,700
30 Harrisburg-Carlisle, PA 4.87% 3.11% $175,000
31 Nashville, TN 4.86% 4.41% $158,000
32 Tampa-St. Petes, FL 4.84% 5.10% $140,400
33 Palm Bay-Melbourne-Titusville, FL 4.83% 3.14% $140,000
34 Spokane, WA 4.81% 3.95%
35 Jacksonville, FL 4.79% 7.03% $165,000
36 Boise City, ID 4.79% 5.28% $173,250
37 Colorado Springs, CO 4.77% 6.71% $221,450
38 Akron, OH 4.76% 1.90% $93,500
39 Youngstown-Warren-Boardman, OH 4.75% 1.89% $88,500
40 Springfield, MA 4.74% 5.13% $188,000
41 Toledo, OH 4.72% 2.07% $98,800
42 Hartford, CT 4.68% 0.42% $220,000
43 Milwaukee, WI 4.65% 4.53% $165,000
44 Lakeland-Winter Haven, FL 4.64% 4.89% $119,950
45 Honolulu, HA 4.55% 3.76% $466,000
46 Virginia Beach-Norfolk,NC 4.44% 3.76% $230,000
47 New Haven-Milford, CT 4.39% 2.60% $117,000
48 Kansas City, MO KS 4.36% 2.66%
49 Charlotte, NC 4.32% 6.28% $138,000
50 Augusta-Richmond County, GA 4.28% 4.62%
51 Dayton, OH 4.25% 2.18% $63,000
52 Birmingham-Hoover, AL 4.23% 4.29% $63,000
53 Raleigh, NC 4.16% 7.55% $156,000
54 Pittsburgh, PA 4.13% 6.08% $157,000
55 Dallas-Fort Worth-Arlington, TX 4.13% 5.09% $157,000
56 Minneapolis-St Paul, MN 4.08% 3.56% $222,700
57 Oklahoma City, OK 4.07% 4.18% $152,250
58 Houston, TX 4.01% 6.08% $162,500
59 New York-Newark-Jersey City, NY N.J Pa. 3.99% 6.48% $375,000
60 Miami-Fort Lauderdale-West Palm Beach, Fla. 3.98% 4.17% $210,000
61 New Orleans-Metairie, LA 3.95% 5.94% $153,000
62 Ogden-Clearfield, UT 3.94% 4.02% $178,500
63 El Paso, TX 3.93% 2.85%
64 Washington-Arlington-Alexandria, DC VA 3.92% 4.60% $385,000
65 Wichita, KS 3.89% 2.51%
66 Memphis, TN 3.80% 4.22% $128,000
67 Columbus, OH 3.78% 5.70% $119,950
68 Madison, WI. 3.75% 5.40% $244,000
69 Indianapolis, IN 3.72% 5.03% $114,450
70 Omaha, NB 3.70% 4.64% $123,550
71 Fresno, CA 3.65% 5.82% $210,000
72 Albuquerque, NM 3.62% 4.13% $129,000
73 McAllen-Edinburg-Mission, TX 3.57% 5.11% $85,000
74 Cleveland, OH 3.56% 4.69% $110,000
75 Austin-Round Rock, TX 3.50% 7.40% $225,000
76 St. Louis, Mo 3.46% 4.35% $89,900
77 Worcester, MA 3.45% 4.97% $225,000
78 Syracuse, NY 3.41% 2.55% $101,450
79 Columbia, SC 3.39% 3.56% $124,650
80 Buffalo- Niagara Falls, NY 3.36% 2.08% $110,000
81 San Antonio-New Braunfels, TX 3.29% 6.22% $128,494
82 Charleston, SC 3.27% 6.09% $199,000
83 Louisville, KY 3.24% 4.69% $117,000
84 Cincinnati, OH 3.18% 6.38% $122,499
85 Knoxville, TN 3.11% 6.27% $129,950
86 Deltona-Daytona Beach, FL 3.10% 8.23% $135,000
87 Rochester, NY 3.09% 6.27% $104,000
88 Allentown, PA 3.07% 3.00% $185,000
89 Little Rock, AK 2.97% 3.59% $177,000
90 Baltimore-Columbia-Towson, MD 2.97% 2.88% $276,753
91 Des Moines, IA 2.92% 4.32% $186,500
92 Cape Coral-Fort Myers, FL 2.91% 5.41% $177,000
93 Baton Rouge, LA 2.87% 5.53% $178,750
94 Winston-Salem, NC 2.66% 5.08% $100,000
95 Durham-Chapel Hill, NC 2.55% 8.95% $156,500
96 Scranton–Wilkes-Barre, PA 2.40% 6.62% $104,500
97 Jackson, MI 1.98% 9.44%
98 Chicago, IL 1.95% 2.27% $104,500
99 Bridgeport-Stamford-Norwalk, CT 1.92% 2.56% $441,250
100 Albany-Schenectady-Troy, NY 1.78% 3.51% $195,250
Chart Data courtesy of Realtor.com and Kiplinger.com

US Real Estate Market 2017 to 2020

Take a good look at housing reports including separate ones for the New York real estate market outlook, Los Angeles real estate outlook and the San Francisco Real estate market as key indicators. Some pundits are suggesting California could see a less rosy outlook in the years ahead, but with continued low fuel prices, low interest rates, and eases in regulation at the Federal level, California should fare well economically.

From a report in the Pacific Coast Business Times, Mark Schniepp, director of the California Economic Forecast is quoted as saying that economic indicators do not point to a recession this year or next.

Nationwide, consumer confidence is near a seven-year high and corporate profits are trending up, which slumped prior to the Great Recession. And even though more people are buying cars and homes, household debt levels are tame, said  The current seven-year economic expansion is old but it’s not running on fumes, he said.

Schiepp said “We really don’t have any imbalances or bubble concerns. Therefore, at this time, we don’t see any recession — none. If you were wondering about 2017 and all those blogs and articles (forecasting a recession), well forget about them.” Schniepp spoke to an audience at the Hyatt Regency in Westlake Village LA, during the 2016 Los Angeles County and Ventura County Economic Outlook.

The prognosis for 2017 housing markets is positive

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Is 2017 the right year to buy rental income property?  What are the best investments in 2017 including investing in real estate?

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