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The Top Real Estate Trend of 2017: Housing Market Fragmentation

January 31 2017

people puzzleTaking a chunk out of real estate trends for 2017: Housing market fragmentation. And like a nightmare math problem in a cinder block sized textbook, it's all Greek to real estate professionals nationwide.

What's the main factor in this problem?

In a wide range of locations and segments, buyers and sellers are doing the math—and coming up with different results. Small home inventory is miniscule, thus this segment is seeing sharper price growth than larger, higher-end options. Urban areas are appreciating faster than the 'burbs, leaving sellers to pull their hair over figuring out an 'ideal' listing price – and sellers shaking their heads as they struggle in vain to determine 'fair' housing prices – and offers. How's a real estate professional to advise his clients?

The sum of the parts

The best move for families will depend on their situation:

  • Growing family? - Now's the time to upsize. The average price of a two-bedroom climbed 59 percent nationwide, while four bedrooms saw a more modest 41 percent rise. For those looking to move on up, this offers the best of both worlds: Huge buying – and selling – advantages.

  • Starting out or sizing down? - For first-time buyers, retirees and others looking to cash-out and scale-back, low supply and greater competition have created a tight market. Here flexibility is key: Handling updates will earn a better deal, as will willingness to move from the city center. Case in point: Price per square foot in metro areas: 54 percent rise. Urban cores? Seventy-six percent.

The financing factor

Real estate trends of record-low mortgage rates also aren't expected to last, and the costs will add up: Just a half-point rate jump from 3.7 percent to 4.2 percent adds $864/year on a $250,000 home – so buyers should also consider this when making the decision to stay or change the status quo.

To view the original article, visit the Properties Online blog.