What’s in Store for the Rest of 2017, and Why Home Buyers Should Act Now
Time Could Be Running Out for Buyers Wanting Low Mortgage Rates and Home Prices
For years, the nation’s housing market has been making a slow, slow climb back to normalcy — and for all intents and purposes, it’s almost there. As a result, the days of low interest rates and low home prices are starting to drift away in our rear-view mirror.
We’re headed back into higher mortgage rate territory, so if you’ve been on-the-fence with your home buying decision, you might want to act now. With that in mind, here is what appears to be in store for the rest of 2017.
Mortgage Rates Will Continue to Climb
The mortgage industry had a volatile couple of months at the start of the year, which isn’t uncommon whenever there’s a change in the presidency. But, this presidency is unlike any other we’ve had and the recent challenges brought up against the administration has the entire housing market in a state of uncertainty.
Mortgage rates are still expected to continue to climb throughout the remainder of this year and next year, however, with many experts predicting interest rates as high as 4.5 to 5 percent.
Affordability and Inventory Will Be Issues in the Second Half of 2017
Along with rising interest rates, property values are also starting to climb. This means selling prices are going to go up. In fact, between the interest rates and the property values, there is the chance that a large number of potential home buyers might find themselves priced out of the market later this year. This will be especially the case in the country’s bigger markets. If income growth can keep pace, then it could create some major challenges down the road for home buyers.
Also impacting selling prices in today’s biggest market is a lack of inventory. New home construction is still moving slowly as the market continues to be predominantly driven by existing home sales. With more and more baby boomers choosing to renovate their homes rather than selling them and moving to more accommodating housing, it drops the available inventory even further, thus causing bidding wars that will inflate prices even higher.
The one area where new construction is increasing is in the luxury home market. Prior to Trump getting in office, this corner of the building industry was sluggish, but since he took office, the number of affluent homes being built has grown significantly. The only problem is that these homes only cater to a very, very small portion of the population.
First Time Home Buyers Are Going to Flood the Market
Buyer competition has been slim for some time now, but that is also expected to change very soon. With all of the changes taking place in the nation’s housing market, more and more first-time home buyers (mainly millennials) are becoming active players because they are info-savvy and they see the writing on the wall. With such a sharp increase in demand, home prices will be gathering steam on their way northward.
As you can see, there are plenty of big changes to be expected in the housing market throughout the second half of this year and well into 2018. Are these changes enough to spark on-the-fence buyers into action? That will remain to be seen.
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