Real Estate is dynamic – ever moving and changing. Interest rates increased recently and are expected to increase several times, periodically, throughout 2017 according to Federal Reserve Chair, Janet Yellen. When interest rates increase, it means that money becomes more expensive to borrow which effectively reduces your PURCHASING POWER. The fact is that there are still many millennials entering the buying phase in their life, meaning that buyer demand is still available but if wages remain stagnant and interest rates continue to increase, these buyers will be squeezed out of certain markets. The good news is that those homes found in the lower price ranges can see an increase in demand and therefore price from the shift of millennial buyers due to an increase in interest rates; see how that works?
To summarize the above, buying will not slow down but rather shift as Millennial buyers enter the market.
According to an analyst at Forbes, supply is expected to increase but only slightly. Short supply was a big factor to the housing price increase you witnessed in 2016. With only a modest increase in supply this year, we can expect to see continued appreciation of homes into 2017 as sellers maintain the upper hand over buyers due to supply/demand.
Donald Trump comes into play. If the president successfully enacts his promise to increase infrastructure spending, cut taxes and deregulate, the near term consequences could be POSITIVE for the local housing market as money begins to circulate internally from spending and tax breaks and the mortgage industry loosens the strings with decreased federal regulation. Also, investments from Ford, General Motors and Chrysler could definitely impact the local economy as consumers have more discretionary income and an increased consumer confidence.
Overall, we have a positive outlook on 2017.