A new report from independent mortgage insurer Arch MI calls for prices to rise 2-6% in each of the next two years.
“With interest rates and home prices both on the rise, first-time homebuyers – largely Millennials – may want to consider making the jump from renting to owning sooner rather than later,” said Dr. Ralph G. DeFranco, Global Chief Economist, Mortgage Services, Arch Capital Services Inc.
The firm’s Housing and Mortgage Market Review says that those markets in energy-extraction regions remain at risk from lower prices despite some improvement in recent months.
Alaska, North Dakota and Wyoming are all at moderate risk of price decline.
Tax bill set to impact these markets hardest
Changes to the tax code are also set to make a difference with high-cost high-tax markets hit hardest relative to previous tax rules while lower-cost areas will benefit.
New York, New Jersey, Connecticut, California and Maryland will be most affected the report says.
Despite the affordability challenges and the impact of the tax changes, Dr DeFranco is not forecasting a bubble.
“Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill,” he concluded.
More market update:
Homeowners should find their homes adding value through the rest of this decade; but that means more pressure on affordability for buyers.