Happy New Year!
With the new year upon us, one of the questions I hear most frequently is where I think the real estate market is headed in 2017. Buyers, want to know if the market will be bit more favorable to their interests and Sellers want to know if this is the time to sell.
Ah, if only I had a crystal ball and could cut right to the chase to tell you what’s going to happen in the 2017 real estate market. Since we don’t have a handy tool to help us discern the future, even though we wish we did, we rely on experts in various economic niches for our housing market prognostications every year. Let’s dive in…
As you know, the Feds raised the federal funds interest rates earlier this month. While it was an increase of only a quarter of a percentage point they did say to expect a couple more rate hikes in 2017. So, how does this affect the real estate consumer?
Those with an adjustable rate mortgage will take a hit, as will homeowners with an adjustable rate home equity line of credit, or HELOC, tied to the prime rate (albeit a smaller, hardly noticeable hit in most cases). Those of you in this position contact us to discuss selling before those rates continue to rise.
If you’re planning on purchasing a home and need a mortgage, while the feds’ move should encourage you to act more quickly than you’d planned, don’t let it scare you off completely. Even with the interest rate hike in December, mortgage rates are still at historic lows right now, so jump into the market and get that dream home.
If the feds make good on the promise of additional interest rate hikes, homebuyers on tight budgets that choose to wait later in 2017 to buy a home may find themselves knocked out of the market. Even a half a percent increase on a 30-year fixed $250,000 mortgage could increase the annual payment more than $850 according to Fortune.com’s Kerry Close. Interest rate predictions for 2017.
The good news, however, is that “There’s a lot that buyers can do to mitigate the effects of rising rates, including looking for lower-priced homes, putting more money down or changing term lengths on a mortgage’s fixed-rate component,” Jonathan Smoke, chief economist at realtor.com tells Inman.com’s Amber Taufen.
How about home prices in 2017?
That’s the burning question for folks who plan on buying a home down the road. By the end of November, the median sales price of a home was $271,400, up 7.7 percent from last year.
Housing market experts predict that although they won’t rise as quickly as they did this past year, home prices will rise about 3.5 percent in 2017. So, as long as the aforementioned interest rates stay put, there’s a bit of good news for you if you need to wait until later in the year to purchase.
The housing market’s strength depends on a number of variables, one of the most important of which is the health of the job market. Although it’s better than it was during the recession, and although president-elect Trump is promising to amp it up, hiring is still not quite where we’d like to see it. This is something that Fed policy makers will look at when deciding whether or not to raise rates again. 10 best kept secrets to sell your home.
I know this is a lot to consider as you think about your future home-buying prospects but, really, there’s nothing you can do about anything that will impact the housing market. My best advice to you is to jump in as soon as you can whether it’s to buy or sell.
Run a Free advanced search on our site or get a quick market comp of your home: Orange Sky Boutique Real Estate