The real estate industry is poised for solid growth for the next three years and quite possibly beyond, with home prices rising 4 to 5 percent each year and a solid expansion of new-home construction, according to a recent survey of economists and real estate analysts.
The survey, by the Urban Land Institute, found broad agreement that the nation’s economic recovery will strengthen at least through 2017, laying the foundation for healthy real estate markets nationwide.
The three-year forecast doesn’t drill down into specific markets, but its conclusions bode well for Bay Area real estate. Our region has been at the forefront of the current economic recovery, and another three years of expansion will keep buyers plentiful and sellers motivated to trade up to higher-priced homes.
Earlier this month we reported that the Bay Area leads California in job growth. Last year economist Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy, told Pacific Union that the region’s tech-focusd economy will keep housing demand high.
Among the results of the Urban Land Institute survey:
- Housing starts will rise from 647,000 in 2014 to 700,000 in 2015 to 815,000 in 2016 to 900,000 by the end of 2017.
- The average price for existing homes is expected to rise by 5 percent in 2015, 4 percent in 2016, and 4 percent in 2017.
- Net job growth is expected to be 2.9 million per year through 2017, compared with a long-term average of 1.2 million. Low unemployment rates should lead to healthy wage gains.
- Real estate lending will remain competitive and favorable for borrowers.
“In summary, almost all U.S. real estate participants would be very pleased if the future unfolded as predicted by the ULI consensus forecast,” Urban Land Institute executive William Maher said in a statement accompanying the survey results.
Although growth could be slowed by economic downturns, foreign crises, interest-rate spikes, or oversupplies, Maher said, “real estate pros predict three more years of smooth sailing for U.S. real estate.”