Real Estate Blog: 4 Questions as 2017 Unfolds

12 Jan Real Estate Blog: 4 Questions as 2017 Unfolds

As 2017 unfolds, I can’t help but reflect on the factors that contributed to an extremely busy year in real estate in 2016.  As I’ve mentioned before, low interest rates, low inventory, accessible financing and motivated buyers and sellers all contributed to continued price appreciation over prior years in many market areas.

Here are a few questions that I’ll be intently observing as 2017 unfolds.

1) Will mortgage interest rates maintain, increase or pull back ?
Since President Elect Trump won the election in November, the bond market has been volatile to say the least. With a change of president looming, I’ll be curious to see if the bond markets stabilize as the 1st quarter of 2017 ends. Mortgage Rates have jumped so quickly that it’s too soon to analyze the impact this increase has caused. The fed has threatened to have multiple increases throughout 2017. I believe at this point is merely talk until they see the actual impact of current increases.

2) Will higher rates cause a slowdown in prices?
I recently heard a quote, “higher interest rates will not affect housing prices.”  While some may agree with this, I think some segmented markets will be impacted. Let’s face it…interest rates have been artificially low for years and a percentage of buyers when considering a purchase look at “what will my mortgage payment be?” vs. “what is the price of the house?.”  As a general barometer,  I feel that the current market of low rates has conditioned how we think about payments, debt, etc.

3) Will inventory shift from shortage to balanced?
Many areas have continued to have a shortage of inventory entering 2017. If the market slows and shifts with the recent mortgage rate increase, inventory will increase.  I’ve noticed some neighborhoods and/or market areas already shifting to more of a balanced demand vs. supply. Pricing and marketing one’s home will become more and more critical. I’ve completed more private appraisals lately for both buyers and sellers getting an outside opinion of value.

4) “The Trump Effect”- What will really happen once President Elect Trump takes office?
Regardless of political sides, the Trump effect is something we have no historic basis for identifying trends. Prior to the election results, many said the stock market would plummet if Trump was elected. It has basically done the opposite and continues to rally. Many state this rally is due to the optimism of some of Trump’s proposed policies, plans etc, but this rally is widely based upon just that “optimism.”  What will happen if this optimism subsides and/or stumbling blocks occur as President Elect Trump’s administration unfolds. I’m not saying it will but just raising the question.  This is something to watch closely as I’m sure many will.

2017 looks to be an interesting year due change unfolding and possibly new variables in play. I’d like to hear your opinions and thoughts as well!

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.