Every year I like to make predictions about how the real estate market will perform. I’m working on 2018, so stay tuned for that this week, but let’s see how I did in 2017. View the original post here.
- Interest rates will stay between 4-5% this year. This may seem like sticker shock because rates were at 3% for so long, but rates did go up right after the Election as the market hit all time highs. If the market is doing well, that is bad for interest rates (drives them up). I don’t expect to see a dramatic change overall, but they will fluctuate somewhere between 4-5% on any given day. This was/is still true. Rates are in the low 4% range.
- Prices will increase. That uncertainty I mentioned will also create fear in buyers. They’re afraid they will miss out on the low interest rates (which are already higher than they were last year) and will jump early in the year on new inventory. Lots of demand creates price increases. This was true. Small growth, about 3% over 2016, but still an increase.
- Inventory will be slow and low, again. It’s a beauty contest these days in our market. If something is renovated, shows well and priced well – it flies off the market. If it needs work, usually it sits for a while longer. Millennials are the biggest first time buyer pool and this the trend I’ve seen the most – they want something already done instead of something that needs work. Counter intuitive to the HGTV influence, but it’s true. Also true, sadly. Our inventory level is staggeringly low. End of year active listings were at 351, which is down from the 399 in 2016. The 5-year December average is 394. There are just not that many homes to choose from.
- Expect the unexpected. Will the new disclosure laws be eliminated? Will financing change? Will there be a buyer credit like years ago to help market movement? It’s unknown if there will be an outside influence into our market. This was true because of the new tax plan. It’s still unsure how this will impact our market, if at all, but challenging the Mortgage Interest Deduction and other deductions is certainly new for all homeowners!