Real estate experts across the country believe 2017 will be a year of steady growth for the housing market. In Part III of Union Street Media’s 2017 Housing Forecast, we explain the factors contributing to this nationwide sentiment.
Home Prices Will Rise Slowly
Several industry leaders have suggested that home sales will continue to rise in 2017. However, the growth will be more moderate than in 2016; which saw the fastest increase in a decade at about 6.5%, according to Zillow.com. The extent to which growth will slow remains uncertain.
More People Will Have Access To Loans
As discussed in our 2017 Housing Forecast Part II, the conforming loan limits have risen for 2017. This will grant well-qualified buyers access to larger home loans – the limit for a single unit home in the majority of the country is up from $417,000 in recent years to $424,000 in 2017.
With access to more money, home buyers will now be able to purchase more expensive homes, which experts say could cause homes that sat in market in 2016 to be scooped up quickly in 2017.
Mortgage Rates Will Rise
The FOMC plans to raise the Fed Funds rate three times in 2017. This suggests that the Federal Reserve expects a moderate increase in inflation in the economy, which will trigger mortgage rates to increase as well. So, while the new conforming loan limit will give buyers access to larger loans, it will likely cost more for access to those loans. This explains why experts believe real estate spending will only moderately increase in 2017.
According to the Washington Post, “Sellers have finally regained enough equity in their homes to feel comfortable putting them on the market.” Also, with mortgage rates expected to rise, homeowners who are considering selling in the next few years might get their property on the market sooner rather than later; if they wait, they risk selling for less than they could get right now.