Real estate experts and pundits alike are explaining why 2017 is shaping up to be the year of the seller. A culmination of several factors are aligned to make this year remain a sellers market. Here is why:
Inventory is shrinking - When inventory shrinks, available homes become more valuable. Given the current pace of home sales, the inventory equals 4.2 months of sales. To put that in context, a supply of six months is considered a balanced market between buyers and sellers.
Home Prices Keep Rising - The national real estate market is predicted to slow down a little in 2017 compared to the last two years. Home prices are anticipated to increase 4 percent and existing home sales are forecasted to increase 1.9 percent to 5.46 million homes.
Pent-Up Buyer Demand - Sellers could find that it might take a little longer to sell their property this year than it did in 2016. If the job market remains strong it is anticipated that even with the increase in listings along with the uptick in new home construction it will not be enough to outpace pent-up buyer demand. Even as some parts of the country may cool down a bit, other areas will continue to heat up. Once again it comes down to location, location, location.
Mortgage Rates Are Still At Historic Lows - If you’re ready to buy, now is a good time to pull the trigger. The record-low mortgage rates seen in 2016 aren’t expected to last. Rates could rise as much as half a percent this year. On that note, the Federal Reserve just announced that there would not be a rate hike in February. It appears as though the Fed is awaiting clarity on the new administrations fiscal policy. This is a great time to lock in your rate and beat the next rate increase.
Market Growth Rate - The coming year should finally see a return to a historically normal growth rate in the real estate market. The past 12 years have been a roller coaster of highs and lows, jump-starts and slow-downs. We should see and up-tick in home sales early this year as would be buyers race to beat any rise in interest rates.
Here is what it all comes down to: The loosening of lending standards, expanding new home starts, increased equity and home values, and historically low mortgage rates will continue to fuel the real estate market throughout 2017.