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2017 And What To Expect With The Housing Market In Denver
Welcome 2017 and to everyone I hope you had a wonderful New Year. One of the questions I hear most frequently is where I think the real estate market is headed in 2017.I don't know why this surprises me considering I wear a shirt at the gym most days that says "Wanna Buy A House" or "because I love houses". So buyers, especially, want to know if the market interest rates will go up and by how much and how putting Trump in office affects their home buying options.
Ah, if only I had a crystal ball and could cut right to the chase to tell you what’s going to happen in the 2017 real estate market.Seriously if I had a crystal ball I would use it for a lot of things and real estate may or may not be the first thing I ask the crystal ball but it would be in the top 10. Since we don’t have a handy tool to help us discern the future, we rely on experts in Real Estate and various economic niches for our housing market prognostications every year. Are they always right? Nope, but they do get awfully close. Closer than the weather man incase your are sinical of experts.
Personally, I combine what I learn from the economic forecasts with my experience every day as a boots-on-the-ground real estate agent here in Denver. Its easier to see trends as an agent when I look at homes on the MLS and see how the prices and demand change. So lets dive right in.
As you know, the Feds raised the federal funds interest rates close to the end of 2016. While it was an increase of only a quarter of a percentage point they did say to expect a couple more rate hikes in 2017. So, how does this affect the real estate consumer?
Yes, those with an adjustable rate mortgage will take a hit, as will homeowners with an adjustable rate home equity line of credit, or HELOC, tied to the prime rate (albeit a smaller, hardly noticeable hit in most cases). If you have one of these types of loans take a breath.
If you’re planning on purchasing a home, on the other hand, and need a mortgage, while the feds’ move should encourage you to act more quickly than you’d planned, don’t let it scare you off completely. Even with the interest rate hike in December, mortgage rates are still at historic lows right now, so jump into the market and get that dream home. I remember my first home I bought with my husband in Florida back in 2003 was at about 7% and we thought that was good at the time.
If the feds make good on the promise of additional interest rate hikes, homebuyers on tight budgets that choose to wait later in 2017 to buy a home may find themselves knocked out of the market or may have to decide to reduce the price of the home they were looking for before the rate hike. Even a half a percent increase on a 30-year fixed $250,000 mortgage could increase the annual payment more than $850 according to Fortune.com’s Kerry Close. Some of this depends on the type of loan and your credit score. If you are looking for a lender please don't hesitate to contact me I know some great Lenders who can walk you through the process.
Here is a scary fact...if mortgage interest rates go from 4 percent to 4.25 percent, 965,000 potential homebuyers will be leaving the buyer pool, according to the National Association of Home Builders.
The good news, however, is that “There’s a lot that buyers can do to mitigate the effects of rising rates, including looking for lower-priced homes, putting more money down or changing term lengths on a mortgage’s fixed-rate component,” Jonathan Smoke, chief economist at realtor.com tells Inman.com’s Amber Taufen.
How about home prices in 2017?
That’s the burning question for folks who plan on buying a home down the road. By the end of November, the median sales price of a home was $271,400, up 7.7 percent from last year. We all know that the average price of a home in Denver is much more than that. Denver sits around 330,000. up 5% from last year.
Housing market experts predict that although they won’t rise as quickly as they did this past year, home prices will rise about 3.5 percent in 2017. So, as long as the aforementioned interest rates stay put, there’s a bit of good news for you if you need to wait until later in the year to purchase.
If you’re planning on upsizing, fortune.com’s Close says you’re sitting in the sweet spot. Small home prices are expected to rise faster than larger ones and city dwellers can expect more home value appreciation than those in the outlying metro regions. In other words, expect your small home to be the belle of the neighborhood real estate market when it’s listed. In Parker, Colorado we tend to see as real estate agents home in the 300-400,000 price range appreciate faster than homes in the 700-900,000. Some of the reason for that is the demand for more affordable housing.
Which leaves those who hope to downsize in a not-so-sweet spot. Expect lots of competition from other buyers for these smaller homes in the lower price ranges. In fact, prepare for it by cementing your financing and being ready to submit an offer immediately. Last summer the demand was high for lower more affordable priced homes. If you are looking to sell or buy I can help you with the preparation part – feel free to give me a call or text. 303-597-6699
That elusive inventory problem
Much of the blame for the low inventory of available homes (causing home prices to rise) goes to the lack of new home construction across the country. There was some good news on that front, however, when December’s National Association of Home Builders/Wells Fargo Housing Market Index rose to the highest level since summer 2005. This measure of homebuilder confidence is good news for homebuyers as long as it translates into new housing starts. The only problem with waiting for a new build is exactly that the waiting process. Most new build in the Denver metro area take anywhere from 11-18 months.
A lot of it boils down to “it all depends on . . .”
The housing market’s strength depends on a number of variables, one of the most important of which is the health of the job market. Although it’s better than it was during the recession, and although president-elect Trump is promising to amp it up, hiring is still not quite where we’d like to see it. This is something that Fed policy makers will look at when deciding whether or not to raise rates again. Did I mention one of the reasons I love living In Parker Colorado is the ability to shop small business downtown in the quaint shopping district to help keep jobs and create new jobs for these boutiques and restaurants. If you have questions about moving to Parker or Denver I am happy to help answer questions and show you around our lovely city.
I know this is a lot to consider as you think about your future home-buying prospects but, really, there’s nothing you can do about anything that will impact the housing market. My best advice to you is to jump in as soon as you can. Its scary but I am here to help you with your journey and make it a smooth transaction.
Let me help answer any questions or concerns you might have about the housing market so we can make your journey a smooth and successful transaction.
Call or text me 303-597-6699.
Tatyana truly understands the dynamics of selling homes in the Denver Metro real estate market and is an expert at educating her clients so they can make the best and informed decisions for their need....