2016 was a roller coaster of a year, and 2017 is likely to have some surprises in store as well. There are already changes being felt since Donald Trump won the presidential election, and while this change is unlikely to alter the fundamentals of real estate in the US, we expect there will be more.
There has already been a slight jump in mortgage rates, although many predictions don’t see them rising above five percent. Even so, that increase in percentage points could mean the difference between being able to afford a home and not – especially for millennials and first-time home buyers. Supreme Lending’s John McClellan, in his 2017 Mortgage Forecast, showed how even a couple mortgage points could add hundreds to a monthly payment.
Fortunately, Realtor.com’s 2017 National Housing Forecast predicts that the market will normalize a bit, which means that prices might not be rising quite as rapidly as they have been. However, those who live in areas that are seeing exponential population growth may not see a slowdown in price growth. This, coupled with the rising mortgage rates, means that the 2017 real estate market should remain tricky to navigate in the coming year.
What’s a prospective home buyer (or seller) to do? We asked some of the real estate experts at HomeCity what they are recommending their clients do in 2017.
- Lock in your low mortgage rate while you can. “While rates have gone up slightly, they are still historically low,” says agent Mike Williamson. “Economists predict that they may rise in the near future, so the sooner you act, the better a rate you’re likely to get. Millenials entering the housing market, as well as Boomers looking for retirement homes, will benefit greatly from a lower mortgage rate, which can affect your monthly payment by hundreds of dollars!”
- Take advantage of lower mortgage insurance rates. We saw mortgage rates rise slightly after the election, but it looks like mortgage insurance rates are dropping. “The mortgage insurance rates just dropped by at least 25%, effective January 27th,” informs agent Amy Vallejo. “This means that on a 200k home it would decrease the PMI by $75. Lower PMI means that a buyer can qualify for more home (roughly $10,000 more on the above example). That, coupled with the unsure mortgage rates slated to rise in the upcoming months, makes right now the best time to buy.”
- Inventory is still an issue, prepare for a competitive market. “Be prepared to act quickly when you find the home you love,” advises agent Korey Solomon of Sold Sisters DFW. “As the house shopping season picks up, the fewer days homes will stay on the market and the more multiple offer situations you will run into. One of the best ways to be prepared is to have talked to a lender and be pre-approved.”
- Buyers: get a lender involved first. As stated above, having a lender lined up before you begin the home buying process is very helpful. “Talk to an experienced lender earlier in the process,” adds agent Jessica Kasper. “They can help with expected costs, help build or repair your credit,and find amazing down payment assistance programs that are out there for certain buyers. This helps buyers to quickly narrow down their home search and ensure they are in the ideal area and price range for their needs.”
- Sellers: cash in while you can. “In our area, we have had many consecutive years now of increased home prices,” says Broker Seth Thompson. “If you own property and have thought about selling, I think 2017 will be a good time to sell before our market experiences a correction.” According to statistics, we’re actually in one of the longest periods of appreciation in history. A market correction is inevitable, and sellers would be wise to get the most for their house by selling while the market is hot!
- Buyers should act early, sellers should wait a bit. “Statistics show that home prices are the lowest during the first quarter of the year, and the highest during the second quarter,” adds agent Kristi Richards. “To take advantage of the best prices, buyers should be looking to buy early in the year [January, February, and March] to take advantage of this. Avoid being in multiple offer situations and paying higher prices in the spring! Sellers may want to consider waiting to sell during the second quarter [April, May, June] when demand is at its highest, causing prices to go up.”
- Increase your net worth. “Every three years the Federal Reserve releases a report based on their research from the last three years,” says agent Jonathan Bane. “From 2010-2013, they report that a homeowner’s net worth is around 36 times that of a renter in the United States. The Chief Economist has reported that for 2013-2016, the number was even higher; a homeowner’s net worth is now 45 times greater than that of a renter. 45 TIMES! Wouldn't you like to be someone growing your net worth instead of paying your landlord every month?”
- Whether you’re buying or selling, hiring an experienced agent is KEY. “In our extremely competitive market, for buyers as well as sellers, having an experienced agent on your side will provide you an opportunity that might edge out the competition when negotiating an offer,” advises agent Carmen Nichols. “An agent with years of experience will have more tools at their disposal and positive working relationships with other industry professionals. Combined, this is a formula for success!”
Aside from these tips, familiarizing yourself with how the economy works as a whole, and how this affects the real estate market, will give you a substantial leg up on the competition. We love this article by Ray Boss Jr., a ReMax agent in Maryland, which outlines several changes that may take place over the coming year and what to expect from them.
No matter what happens, we’re sure to be in for a wild ride in 2017! Austin real estate as well as Dallas real estate markets are some of the hottest in the country. Homes for sale in Austin, Texas are expected to continue to sell at record rates, while homes for sale in Dallas, Texas, are selling just as fast (depending on the neighborhood). If you are looking in either of these cities, stop by our search page to search for homes!