Is 2017 the year you’re going to be a homeowner for the first time? It might be a great year to buy a house because interest rates will continue to rise as we head through 2016 and into 2017. Predictions already have the end of 2017 with interest rates over 5%. There is a good selection of homes on the market, prices are still reasonable and interest rates are low. Now would be the best time but here are four big things that can affect your home buying this next year or even the end of 2016.
#1. Slowing inventory.
For the past few years, we’ve seen a great inventory of homes in just about every market across the country. But that will start to slow along with cooling prices. Certain price indexes have increased about 6% over the last year but estimates for 2017 will put that growth between 3.5% and 5%. This could affect new homebuyers. Homeowners have benefited from higher home values in the past and they may decide that now is the time to sell so this could be a good option for new homebuyers. However, with higher interest rates, it could push some homeowners to reinvest in their current homes rather than sell and buy again.
#2. Rising interest rates.
Just as we mentioned before, interest rates are rising and borrowers will see their own costs rising over the next year as well. The Federal Reserve has raised a key interest rate just over the last month for the first time in a decade. This gradual increases set to go up even more as we head into 2017. The Mortgage Bankers Association projects average rates to be 4.8% by the end of 2016.
#3. Renting versus buying.
Buying a home is still cheaper than renting in most of the major housing markets across the US. For the Irvine California area, this couldn’t be truer. Many people are moving to outlying areas to rent instead of in Irvine or high-density areas because rising rents have literally pushed them out of the county. Buying is still cheaper and at a national level, average interest rates would need to hit about 6.5% to tip the balance.
#4. New millennial’s entering the market.
Now is a great time for millennial’s to enter the homeownership markets. There have been countless predictions about when and where they’re going to start buying houses but Realtor.com predicts that nearly a third of all existing home purchases will be from millennial’s. Certain obstacles such as student loan and inconsistent employment may for some buyers to keep their home buying plans on hold however. With more millennial’s on the market, this means that competition will be a little bit steep in 2017 but the sooner you buy, the more options and lower interest rate still have.
If you’d like to find out more about the Irvine area or surrounding towns, communities and regions that may offer different housing at lower prices, give me a call anytime.