We now know that interest rates are rising, but what about home prices? With 2017 quickly approaching, we’re left wondering if the acceleration we’ve been seeing in home prices and sales will continue into the new year?
A strong market means that competition and tough bidding (sometimes above the asking price) won’t be changing soon. However, the latest survey conducted by the National Association of Realtors of 2,800 U.S. households from October to December, tells us that there won’t be as much of an increase. The rapid growth we’ve seen in the market throughout 2016 with sales prices rising 5% will likely be taking a minor dip to a 4% increase in 2017.
Nonetheless, with interest rates up another .25% many potential homebuyers, especially first-timers, may be rethinking their plans to buy. With current mortgage rates making it more difficult to qualify for a loan and fewer homeowners refinancing, lenders are beginning to make more loans to individuals with lower credit and higher debt-to-income ratios.
Still, a vast majority of the U.S. believes it is a good time to buy a home. As we mentioned in our last blog, rates are still relatively favorable despite recent increases and the market is still in full swing. Change is inevitable and we’re going to be seeing it in 2017, but this optimism proves that any deceleration will be gradual.