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Whats The Outlook For Real Estate In 2017
In December, the Federal Reserve raised interest rates for only the second time since 2006, and a majority of the members of the Fed's rate-setting board predict there will be three more increases coming in 2017. These decisions will cause mortgage rates to rise, potentially making it more difficult for prospective homebuyers to be able to afford the home of their dreams. (In fact, those rates have already started creeping up.) But don't worry too much about this trend. As Redfin Chief Economist Nela Richardson predicts in a recent blog post, "We expect mortgage interest rates to increase, but to no higher than 4.3 percent on the 30-year fixed rate." That's still a great deal compared to historical norms.
Redfin's Richardson also points out that though rates may rise, mortgage credit will likely be more widely available due to slightly looser lending standards. She points out that the Federal Housing Administration will likely lower fees it charges first-time homebuyers, a continuation of a trend begun in the Obama administration, under which it lowered fees in 2015.
In addition, starting in 2017, government-owned mortgage companies Fannie Mae and Freddie Mac will begin backing larger mortgages for the first time in over a decade, making it easier for buyers in expensive markets to finance their purchases.
Though the most recent data on new home construction showed that builders pulled back on new projects in November, the overall trend in home construction is clearly positive, with the average annual rate of new groundbreakings reaching a 1.163 million rate so far in 2016, up about 5% from 1.108 million in 2015.
Expect this to continue in 2017, as home builders are encouraged by higher wages, looser credit, and increased demand from buyers.
Don Egypt is a professional Realtor with years of experience representing purchasers, sellers, institutions and investors. His knowledge and extensive experience in residential, new construction, luxu....