Another year is in the books and real estate professionals across the country collectively saw the housing market continue its trek back toward pre-recession norms. However, many experts now believe that the surprising results of November’s presidential election could throw a number of industry trends off their previous course, and it will be vital to keep up with the many ways in which the market will shift in the year ahead.
One of the biggest changes from previous expectations – which was already observed within weeks of the election – is that mortgage rates started to spike in short order, according to Tribune News Service. Home values have been on the rise for some time, but rates quickly moved from the mid-3 percent range to north of 4 percent. And it’s important to consider what impact that could have on buyers’ motivations.
Assessing the situation
Most agents know that real estate sales in many parts of the country weren’t always easy to facilitate in 2016 because of the limited inventory of properties for sale, and it’s possible that quickly rising rates might discourage additional selling especially among homeowners who refinanced in recent years, the report said. But the fact is that because both prices and rates aren’t likely to shrink back down again any time soon, any efforts would-be buyers can make to get into the market as soon as possible – especially younger adults who have never purchased before – will help them to save at least some money in comparison with what they will closer to the end of 2017.
This might also be made possible by the fact that lenders are expected to continue to loosen their mortgage standards over the course of the year, especially for buyers who can make sizable down payments.
How much could affordability change?
Rates have already risen appreciably, but expectations for that rapid uptick to continue for some time to come are a little dim right now, according to MarketWatch. While rates north of 4 percent weren’t seen for almost all of the first 11 months of 2016, it’s not yet clear whether rates will surpass 5 percent before the end of 2017. More likely is that rates – which have seemed shockingly low to many observers for all but a few brief periods in the past few years – could hover in the 4 percent range for most of the year.
“I don’t believe that there will be any significant changes to interest rates, at least in the near term, since the underlying fundamentals that have led us into a low-interest-rate environment haven’t changed,” Rick Sharga, executive vice president of Ten-X, a real-estate auction site, told the site.
It’s further important to keep in mind – and to remind hopeful buyers – that rates even as high as 4.9 percent are still below pre-recession norms, which tended to range between 5.5 percent and 6 percent prior to the start of the housing downturn. With this in mind, affordability can still be somewhat strong for hopeful shoppers.
Brought to you by HMS Home Warranty. HMS is an industry leader with over 30 years of creating success for clients and providing peace of mind for customers. To learn more click www.hmsnational.com.