What will 2017 Bring for the Housing Market?
I wish I had a crystal ball so I could tell you exactly what will happen! There are those who say 2017 will see a great increase in sales and prices (Redfin) and there are those who say there will be an increase, but just a moderate one (National Association of Realtors). After Janet Yellen’s announcement that the Federal Reserve has raised its benchmark interest rates by .25%, there will be even more speculation.
This is only the second rate hike in 10 years, the first was just one year ago in December 2015. Mortgage interest rates actually went down after that increase. This time though, due to the presidential election, the Fed rate hike comes at a time when the interest on the U.S. Treasury bond is going up. Mortgage rates are closely tied to this. Yellen’s announcement is not a surprise, neither is the fact that rates will continue to be raised as the economy does better. The general consensus is as long as the Fed does not raise rates too quickly or without warning, the mortgage rates may rise but not sharply in 2017.
What does this mean for you if you are buying or selling a home or just thinking about it in 2017? Home mortgage rates are still historically low, the average rate for a 30 year fixed mortgage in November was 4.3% (in 1981 interest rates on a 30 year fixed mortgage were over 18%!). If the Fed is increasing their rate, that means that our economy is stronger and unemployment is down. That is a good thing! There will still be those life changes that necessitate moving, and home ownership will continue to be a good long term investment.
In the short term, the decision to sell or buy is personal and should be based on your own goals and life events. In order to determine what move is best for you, sit down with your realtor and review your current situation and goals to see what options work for you. You will need to take into account all the usual variables like location, amenities, and size. In addition to that, there are other variables that may come into play with rising interest rates including current debt (credit card interest rates will likely rise) and future costs (student loan rates will likely rise). Speculating about the housing market is just that, speculation-don’t let that keep you from making the move that makes sense for your life.