I hope that last year was robust for you and that you’re looking forward to the coming year. 2017 will reward those who are nimble, responsive, and well-informed. The following predictions are mine and based on my observations. I don’t agree with the majority of 2017 predictions that have a rosy forecast. The possibility of significant disruptions in Cambridge and Somerville may affect many real estate decisions.
- This year’s market will be characterized by financial abundance, scarcity of properties, and unexpected and severe disruptions.
- Buyers will push sales prices higher and the sales market will remain robust across all market segments.
- Sellers will typically sell because of need, such as a job relocation, yet there will be an increased number of sellers who want and are able to move up.
- Disruption will include cuts in state and federal funding to cities and towns. Capital improvements, like Somerville’s Green Line Extension, and many social programs will be cut, stopped, or extended. Cities and towns will need to find ways to address significant budget shortfalls. These disruptions, if severe like the GLX postponement, will affect property valuation.
- It will be more lucrative for investors to buy, renovate, and sell than to buy and hold.
- Thousands of new luxury apartments will open this year and it will take significant time for them to be tenanted. The rental market has already been affected with average rents coming declining last year. They will remain stable, though they could dip again.
- The sales market for single family, condominium, and multi-family properties will continue to set price records due to low inventory and an abundance of buyers.
- Buying decisions will typically be based upon duration, ease, and predictability for a daily commute with a location convenient to social exploration and entertainment.
- The desire to live in or near a city will drive decision-making across demographic boundaries, i.e., everybody.
- The various market segments will perform differently this year.
- There will be a surge of first-time buyers and valuation in this segment will rise. Cities with subways and commuter rail lines will benefit the most.
- The $2MM+ segment’s rate of rise will slow as more well-located luxury condominiums are constructed in Greater Boston.
- The rate of rise in for investment properties will slow, although it could rise. Investment properties, often financed via 1031 exchanges, are scarce relative to the abundance of prospective buyers.
- Lenders will continue to differentiate themselves by creating innovative niche services.
- Mortgage rates will remain competitive. Lenders will create unique programs that address particular issues for a segment of those seeking a mortgage. Programs will be unique to that lender and not common to all lenders.