2017 Housing Market Prediction

Chief economists from sites such as; Realtor.com, Zillow, Trulia and respected university settings have this to say about the factors that will influence the housing market:

Mortgage rates

The days of 3.5% rates are over. We will likely see volatility in mortgage rates over the next two to four months as Trump gets started in office. The Federal Reserve increased the rate in December and is expected to do more hikes this year. The experts wouldn’t be surprised if the rates hit 4.75%, which is still very good. Hopefully, buyers will recognize this and not be hesitant to buy based on rising rates.   It is also believed that if income growth picks up, then the rise in interest rates will affect refinancing, but not home buying to a great extent.

Inventory

Experts believe housing inventory, which has been very low for the last couple of years, especially in our area, will continue to be an issue.   There is a great potential for a large number of first-time buyers to enter the market, which will also affect levels. In addition, there is a very good chance that the higher income market will see a surge in inventory and activity because of the expected tax cuts at that level.   The fact that current home owners are staying in their homes more now than in the past, will have an effect on supply levels. Some baby boomers are willing to take less risk than in the past so they are remodeling their homes to be able to age in place.

Affordability

Due to low levels of inventory, prices have risen, which has really affected the mid to lower-tier markets. This is especially true with new home construction. The lack of new homes under $300,000 is putting even more demand on the resale home supply in the $225,000-$275,000 range.   The rise in interest rates will most likely effect this group of buyers, since many of them are stretching their budget just to get into a home now, any increase will have some baring on affordability and thus inventory levels.

Appreciation

Home appreciation will slow overall to around 3 %, with prices not growing as fast at the median level as it will at the high end market. This is because if the Trump Presidency sees greater inflation or risk, high-end homes are a great hedge against this. There is a tendency to shift the wealth away from equity markets into high-end homes for this subset.

We hope this has provided meaningful information for this year’s housing market. Please let us know if you have specific questions about the market you would like to discuss.

Here is to a prosperous and healthy 2017!

Michelle & Heidi

http://www.bellacasateam.com

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About clarkcountyhousetalk

Bella Casa Team is a Real Estate group that specializes in Residential Real Estate. They want home buyers and sellers to be informed so they can make the best choice. It is so important to educate the public, especially during this unstable and unprecedented time in the Real Estate!
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