Real Estate Outlook 2017
Whenever the New Year is just around the corner, all kinds of financial forecasts start hitting the news and so it is with real estate. Every market analyst comes forward with what they feel the coming year will usher in, and the forecasts for 2017 are encouraging based on what 2016 has seen. The real estate market is especially strong this year, with many analysts finding that lower interest rates are a good part of the reason along with a stronger economy all the way around. With this in mind, let’s see what some analysts are predicting for 2016 in the housing market.
Who Do You Believe?
Sometimes there are conflicting reports which are confusing at best. This could be said of the recap for 2016 when it comes to mortgage rates. Some sites report that mortgage rates hit a 2 year high in the final months of 2016 while other sites are reporting that mortgage rates are low. However, the one point at which both sides agree is that there is a strong housing market which has increased demand, so that is a good sign going forward into 2017. Whether rates are high or low, demand is up so lenders will be lending. When demand is low and there is a slump in the market, few lenders are willing to go out on a limb with a risky investment.
The Reason Why Demand Is Important to Lenders
When you follow the real estate market, one pattern that emerges is that this is one market that mirrors the economy at large. When the economy is strong, there is a higher demand for residential real estate. When the market is low or falling, few people want to risk committing to a debt they may never be able to repay. When the economy is strong, lenders see an increase in applications for a home mortgage, and this, in itself, is a key indicator that the housing market is strong. All the analysts in the world can’t give as accurate an assessment as those consumers who are comfortable enough to go into debt – and that, in simple terms is what a mortgage is. Secured debt.
How Can Some Analysts Say Rates Are High and Others Say Rates Are Low?
As an example of just how divergent reports are, themortgagereports.com says that prices and sales are up, stronger than at any time since the bubble burst in 2009. This site also reports that interest rates are at a several-year low which is the reason why real estate is booming. In their words, mortgage rates in 2016 were “downright cheap.” However, on the flip side, financialbuzz.com says that interest rates are higher than they have been over the past two-year period. Even so, both sites agree that housing prices are at a high comparable to days just prior to the onset of the Recession which indicates that homes are in great demand.
Why the Market Is Predicted to Stay Strong
There are a number of factors involved in why the residential real estate market is expected to start, and stay, strong during 2017. Again, it is forecast that the economy will get off to a good start, much of which is attributed to new leadership in the Oval Office. President-Elect Trump has promised to work towards keeping jobs in the US and as his recent visit to Carrier shows, he is a man of his word. With tax breaks and incentives to keep jobs in the United States, there is hope for the economy in the coming four years.
Negotiable Rates in the Forecast
While the feds set the interest rates, individual lenders have an option to go above or below those rates and lenders looking to capture a larger portion of the market will invariable set their rates as low as they possibly can. They need to make a profit but with a greater number of loans being written, they will still realize a profit, even greater than the competition with higher rates, simply because they are writing more home mortgage loans.
Although no one really know what the future holds, it is expected that the housing market will stay strong and mortgages will remain easier to qualify for than in the previous few years. A strong economy will mean that workers are keeping jobs so that lenders feel safer lending large sums. The key to finding great rates is to search around to see what each lender is offering in the way of incentives. Once you’ve found the right lender with better than average rates and finance charges, it’s safer to sign a contract on that new home. What’s in your financial future for 2017? Could this be the year you finally buy that new home? Only time will tell.