Whether you’re preparing to purchase a new home or sell an old house in the new year, it’s important to know how housing trends could affect you. Below are some likely developments that will influence the market this year.
Millennial and Boomer Buyers
As the oldest of the Millennials push into their mid-30s, many will start to settle down and buy houses. Millennials are also reaching an age at which they’re thinking about marriage and children.
Baby boomers, the oldest of whom are entering their late 60s, are also looking to move as they reach their retirement years.
In the last several years, Baby Boomers’ participation in the housing market has dwindled. Many already own homes and may have been reluctant to sell until their properties recovered the value they lost in the housing bust.
Look for Boomers to buy. While some may want to downsize to control expenses, others may look to move to a larger house because to accommodate children and grandchildren, as well as visitors.
Modest Home Value Growth
Home prices have been on a steady incline in recent years. But that momentum may begin to slow down in 2017. Since the Federal Reserve just raised interest rates for the first time in a year, that could have a stabilizing effect on home prices. The National Association of Realtors estimates that price growth will slow to 3.9%, down from 4.9% in 2016.
For sellers, that may lead to a shrinking profit margin in previously hot local markets. Buyers, on the other hand, may be better positioned to snag a deal on a home in areas where prices have recently skyrocketed.
Rising Mortgage and Interest Rates
Following the housing market crash, mortgage rates remained at record lows for years. However, that’s finally starting to change, Smoke said.
The Federal Reserve announced in November of 2016 that it is raising interest rates by a quarter of a percentage point. Rates are climbing now and are expected to keep doing so next year, with the Federal Reserve indicating that three more increases to its benchmark rate are coming in 2017.
As a buyer or seller, this essentially points to acting sooner rather than later if you’re intending to do a transaction next year.
Rates will get higher as we go through the year, and inventory is not going to improve. So winter or early spring will be more advantageous than waiting for late spring or early summer, when most buyers look.
Exodus to the Suburbs
As home prices continue to rise, more buyers will move to the suburbs to find affordable housing. Many people have to look further out from cities to find homes in the right price range. Right here in the Valley, there is a trend toward more affordable homes in the areas, and even counties, surrounding Charlottesville.
Are you planning to buy or sell in the next year?
What are some of your thoughts for 2017?