As we enter 2017, I foresee interest rates continuing to rise and inventory staying low. However, as you’ll see, it isn’t all bad news.
Now that 2016 is at an end, what can you expect from the real estate market in 2017?
One prediction everyone can seemingly agree on is that interest rates will continue to rise. For buyers, this means you might be better off buying sooner rather than later. Buying sooner means locking in a lower interest rate and making your payments better for the entire life of your loan.
This trend could cause sellers who are already locked into a really good rate in the home they currently inhabit to opt out of moving to avoid a higher interest rate and a higher payment with their next home.
Currently, inventory levels are really low. There aren’t a lot of homes available, especially in the lower and more average price ranges. These price ranges are a firm seller’s market. As you get into the higher price ranges, though, we’re still in a buyer’s market. As the economy improves, we may see more activity in these price points. Activity in this area has been slow up to this point, but I wouldn’t be surprised if that improves in 2017.
As rates rise and sellers settle in, that will probably make our low inventory problem even worse. I do believe that inventory levels will stay low in 2017, and home prices should continue to rise. If demand starts to subside, however, that may stymie the overall price increase. In the meantime, builders are acting far more conservatively.
Part of me feels like this market resembles the one we had back in 2006 and 2007, when prices were rising and everybody was getting rich buying and selling. The key difference, though, is that lenders are now asking for far more documentation from buyers than they were back then before they issue a qualification. Buyers, in turn, are far more qualified than they were a decade ago. That distinction alone might prevent us from entering the same recession as we did after that market peak.
In addition to home prices, rent prices have also been rising. If that continues, we may see more first-time home buyers entering the market who would rather own a home than deal with landlords increasing their monthly rate.
Lastly, more and more affluent buyers want to live close to town and in walkable neighborhoods. For Athens, this means the hospital area, the Five Points area, and the Boulevard neighborhood.
As you know, my team and I opened our brokerage this year, and 2016 was fantastic for us. We’re looking forward to having the same success in 2017. If you or anyone you know is interested in buying or selling, don’t hesitate to give us a call. We look forward to hearing from you!