The New Year: The 2017 Real Estate and Mortgage Outlook
Many real estate and mortgage experts are unsure of how the new year will play out—and “uncertainty” seems to be the catchword for 2017.
Let’s take a look at a few of the questions that will be front and center in 2017 and see if we can dispel some of that uncertainty:
Will the Federal Reserve Continue to Raise the Key Interest Rate? In December, the Fed increased the key interest rate by 0.25 percent to a range of 0.5 percent to 0.75 percent. Although the Fed also hinted that it would raise the rates three more times in 2017, keep in mind that the Fed raises or lowers the rates based on ongoing economic projections, so rate increases are not set in stone.
Are Interest Rates Going to Go Up or Down? Combined with the Fed raising the base rate, recent increases in the interest rates at the end of 2016 may point to higher rates in 2017. However, we did see a similar scenario at the tail end of 2015 when the Fed raised the rates and then…nothing. The rates went up slightly in the beginning of 2016, but then fell and remained low almost all year.
Will Home Prices and Home Values Continue to Increase? According to the National Association of Realtors (NAR), the national median existing-home price is expected to increase by 4.0 percent in 2017. This projection is comparable with 2016’s increase of around 5.0 percent, so we’re looking at a modest increase and prices and values will probably continue along the same path that they’re on right now.
How Much Will Economic Conditions Fluctuate? By raising interest rates, the Fed has indicated confidence in the economy and its December 2016 forecast projects economic growth to be 2.1 percent in 2017, which is slightly better than their earlier projections. Although economic conditions always affect the housing and mortgage industries, most experts predict that the economy will continue its moderate improvement in 2017, so housing and mortgage may not be affected to any great degree.
Will the Overall Market Continue to Be Strong? For 2017, the NAR forecasts a 2.0 percent growth in home sales, which is down slightly from the 3.3 percent increase in 2016. Rising interest rates could slow the pace of sales, but continued job growth and the National Association of Home Builders’ recent prediction that the spring market will be one of the strongest in decades should help maintain or even improve the overall strength of the market.
As always, remember that local market conditions—including interest rates, prices, values, and economic variables—can vary, so talk to your real estate agent about your specific market.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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