Throughout 2016, mortgage rates hit record lows and the residential real estate market saw one of its best years in a long time. While it is impossible to know exactly what the real estate market will do, we can look at several factors that will impact 2017. Prospective buyers and sellers should prepare for the following:
Slow But Steady Appreciation
2016 saw relatively high appreciation rates across the country; and while we anticipate home appreciation numbers to slow down in 2017, it is expected that homes will continue appreciating in value. Specifically, real estate experts have predicted that appreciation will slow to about 5% in six months, and 3.5% by the end of the year. Still, for homeowners who see purchasing a home as a long-term investment, this slowdown in home appreciation should not impact your investment decision.
Mortgage Rates Remain Low
While mortgage rates are expected to rise slightly in 2017, they will still remain at historically low numbers. Currently, mortgage interest rates are hovering just over 4%, and this is likely to remain the norm throughout 2017. It is also expected that in the near future, home lending requirements will be relaxed, which will keep rates steady but will stimulate new home purchases—particularly for first-time buyers.
Increased Cost of New Builds
Labor shortages in the construction industry will lead to a higher cost of new builds in 2017 and beyond. This, combined with the higher demand for new construction housing, will put a premium on this labor and the costs associated with building a new home. For this reason, those interested in a new build may want to put off this project for another year or so, or may want to consider purchasing a home that is already built. Otherwise, buyers should be prepared to pay a premium for a brand new house.
Influx of Millennial Buyers
In 2016 and years prior, the majority of Millennials opted to rent as opposed to buying for a number of reasons. For starters, many had student loan debt with monthly payments that prevented them from being able to afford a mortgage. Furthermore, strict lending requirements made it difficult for many to get approved for mortgages. However, with more Millennials paying off their student loans and financing requirements becoming less strict in 2017, it is expected that more Millennials will become first-time buyers in the coming year.
These are just some of the major residential real estate predictions we expect for 2017. If you are planning to buy or sell a home in the Greenville area, or want to discuss ways to get the most out of a current investment, contact the professionals at The Parker Group today.