2017 Housing Market Forecast
Experts predict a strong year for the housing market. Consumer confidence is strong, demand expected to remain strong and experts predict improved supply. First-time home buyers will likely jump into the market this year, and current homeowners will find this is a good time to take the step of buying their next home.
Consumer confidence jumped to the highest level since 2004 extending a surge in America’s optimism for their finances and the US economy.
- The University of Michigan’s final index of sentiment for 2016 rose to 98.2 from 93.8, a jump to the highest level since 2004.
- The National Federation of Independent Business, a small-business optimism index, rose to 98.4% from 94.9, the sharpest surge since 2009.
- CNBC’s 4th quarter All-American Economic Survey found that the percentage of Americans who believe the economy will get better in the next year jumped an unprecedented 17 points to 42% at the end of 2016. Micah Roberts, Vice President of Public Opinion Strategies at CNBC said, “We’re looking at America moving into a more positive era with regard to economic expectations.”
- New York-based consumer board index Bloomberg News reports that consumer confidence climbed in December to the highest level since August 2001.
Consumer confidence in the economy is a strong predictor for a healthy housing market because when that confidence frequently emboldens consumers to invest more heavily in homes.
Many home owners and potential home owners are questioning how this new economy will impact interest rates. Many experts, including Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors delayed putting out their interest rate predictions. However, some organizations are providing some helpful interest rate forecasts:
- HSH.com, a website that follows interest rates, predicts that 30-year fixed rates will peak in the 4.625% or 4.7% range at some point during 2017 which is about 4 and 3/4 up from where we are now.
- Zillow’s chief economist agreed with the HSH forecast.
- Just before the beginning of 2017, Mark Fleming, Chief Economist at First American, said, “I see mortgage rates getting much closer to five percent at the end of next year.
- Jonathan Smoke, Chief Economist at Realtor.com said, “Our forecast is saying we expect rates to hit 4.5%.”
The expected increase in interest rates feels bigger than it is. Compared to years past, interest rates are still at an all-time low. While interest rate increases are expected, the only impact they should have on home buyers confidence in buying a home is to motivate them to buy sooner, before interest rates rise more.
- Freddie Mac reports that, despite the recent jump in mortgage rates, the annual average for a 30-year fixed rate mortgage was 3.65% in 2016. This is the lowest annual average ever recorded by Freddie Mac, and they’ve been recording interest rates since 1971.
- According to Realtor Magazine, “Mortgage rates moved higher again this week. Buyers should still appreciate how low they are because they’re likely to increase further.”
- Despite possible interest rate increases, owning a home is still less expensive than renting. Zillow reports that renters paid an accumulated $470.5 billion in 2016, a 3.8% increase from 2015.
Reports show that existing home sales and new home sales are up and are expected to continue to rise with increases in inventory.
Consumer confidence, expected increases in interest rates and increases in home sales give us reason to believe that this is a great time to consider a move. Contact us today to find out how to get started on finding your first home or your next home. With our years of experience and our expertise, you’ll soon be living in a home that meets all your family’s needs, a house that, as soon as you walk in the door, simply feels like home. To keep up with important housing market updates, follow us on Facebook and LinkedIn. .