2017 will be a year of change.
If you are keeping an eye out for changes in the real estate market, here are a few things you can watch for:
-- Interest rates will almost certainly increase this year. Most projections are for rates to remain in the four percent range, and to top out between four and a half and four and three-quarters. Those are still very low rates historically but remember that for homebuyers it still means a little less in terms of affordability. It may mean that buyers who are marginally qualified may not be able to enter the buying market. If you are planning to buy a home at any time this year, it will not pay you to wait.
-- Appreciation will probably slow a bit, according to NAR, whose 2017 forecast projects home prices nationally growing at a rate of 3.9 percent, down from 2016’s 4.9 percent estimate, and an appreciation slowdown (many experts call it a moderation) of one percent or more in nearly half of the U.S.’ top 100 metropolitan areas.
In this report, Austin-Round Rock MSA rated number nineteen, which may be pretty terrific. Our appreciation on average across that broad area is predicted to be 3.5%, but it is important to remember that is not a number anyone should rely on in considering how much their home value might increase because real estate markets are very specific to location. Rely on your Realtor to assess that for you for a reliable number. Remember the saying that if you have one foot in a bucket of hot water, and one in a bucket of cold water, on average your feet are both warm? It's just about that accurate.
The important takeaway is this: our local market appears to be moderating in terms of price increases, which is sustainable and healthy. You may recall that prior to 2008, many other major metros were appreciating at much greater rates, but they were not sustainable. The Austin MSA was much better off to have had modest but healthy price growth, because we didn't have so far to fall when the market corrected.
--The number of real estate sales transactions is predicted to increase by 7.4%, which speaks to the numbers of people still expected to move here, and the healthy job growth driving demand.
-- Consumer confidence is at a 13 year high right now, according to the Conference Board Consumer Confidence Index. Political change is, for now, creating optimism for the stock market, the economy, jobs and income prospects.
-- Millennials and boomers will move markets. The U.S. real estate market will be in the middle of two massive demographic waves that will power demand for at least the next 10 years. Millennials and baby boomers, the two largest American generations in history, are both approaching life stages that typically motivate people to buy a home: marriage, having children, retirement, and becoming empty nesters. Predictions are that millennials will make up 33% of buyers in 2017, lower than some earlier estimates due to those increasing interest rates.
So, change on the horizon. It looks by most accounts like we in Austin/Central Texas are in an enviably healthy and stable real estate market. Whether buying or selling, it seems wise to make your moves sooner than later. Make the most of your real estate decisions by partnering with a competent Realtor.