Buying a home in 2017? Here’s what to expect.

2016 was an interesting year for Real Estate in the Valley and there is some BIG news for 2017.  In 2016 we flirted with historical low interest rates while continuing to see nearly all neighborhoods and price ranges appreciate. To kick off the year interest rates spiked up about half a percent to around 4%, a response from the presidential election. But that’s not the big news for us Phoenicians.  The boldest prediction for 2017 comes directly from Realtor.com who predicted the Phoenix market as the top performing real estate market in the country.  How about that!?

The prediction puts Valley home prices climbing an estimated 5.9% in 2017, with the number of home sales increasing by 7.2%. Not too far behind is Los Angeles, and Sacramento with closer to a 6% increase in home sales. So are these predictions accurate?  For 2016, Realtor.com predicted the top markets of 2016 would be Providence, Rhode Island and Warwick, Massachusetts.  Both areas rose more than 12% in 2016 eclipsing the national average of around 5%!.  Needless to say, this is great news for homeowners and future homeowners in 2017.

One concern home buyers in 2017 may have is the rising interest rates.  Will they continue to rise?  Will they drop back down, or level off?  Experts differ in opinions, but they can all agree they should not pass 5% in 2017.  More than likely, they will peak closer to 4.5% and could even get back below 4% if we’re lucky.  However chances are, if you can afford a home at 4%, you can still afford it at 4.5%.  Of course we want the lowest possible price, but for most home-buyers, the extra half of a percent should not price you out of the home you want.

Consider this – If you buy a home at 4.5% and the rates drop to 4%, then you can refinance and take on the lower payment.  If the interest rates jump up to 5% +, then be thankful you bought when you did!

The bigger challenge in 2017 may not be the interest rates, but finding the right home. Low inventory (which is a major factor for the price increases of the last few years) is expected to be even tighter in 2017 than it was in 2016.  This does vary by market.  In Phoenix, the most competitive market is under $225k, where you can expect multiple offers on many properties.

Your competition for housing in this range will be a large part millennials, who accounted for 32% of new home buyers last year.  That number is expected to increase as millennials continue to transition from renting to home-ownership in 2017.

Another possibility for changes in 2017 could stem if the interest rates do climb higher.  This could mean a loss of business for the banks, especially in refinances, and banks could be enticed to loosen lending standards to allow more buyers to qualify for loans.

A Tip for first time home buyers: If you are going to buy a home in 2017, now is the time to plan.  The home buying process can take longer than you may realize. Doing research, getting pre-qualified and getting your finances in check can add a lot of time to the process.  The most amount of homes will come on the market in February, March and April this year. If you want the most options to choose from, the time to plan is now!

Save time, money, and stress – contact me directly to elevate your home search.

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