3 Crucial Reasons You Should Buy a Home Before 2017 Ends
1. Rates are rising
In 1981, when mortgage rates hit 18% and seemed to rise every day, single-digit rates seemed like an impossible dream. Last August, however, rates on 30-year mortgages bottomed out at 3.55%. Now that the Federal Reserve finally decided to raise its key interest rate, mortgage rates have been climbing slowly. Today, the average rate is just above 4%; by 2019 or 2020, rates could easily climb to 6%. Before you freak out, take heart: Rising rates aren't necessarily a deal breaker for buyers. The National Association of Realtors® calculated that a rise from 4.2% to 5% would increase average monthly mortgage payments by $90—not nothing, but not a catastrophe, either. And if you take the long view, those higher rates are still historically low.
2. Inventory is shrinking
In November 2016, there were only 1.85 million homes for sale. That's a nearly 10% drop from the year before. And it continues a trend of steady decline since just before the housing crash, when inventory peaked. Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year. Or even next month. Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.
3. Home prices are still rising
The bad news for buyers is that home prices now stand higher than before the 2007 crash, increasing 5% from 2015 to 2016. And housing experts expect an additional 2% to 3% jump in 2017, DeNapoli says. “Prices continue to go up; we have yet to see that ceiling,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles. “I think they have room to grow.” How high prices will rise and how long they'll remain high is anyone’s guess. Rising mortgage rates and the new Trump administration have introduced “uncertainty” into the real estate market, Levin says."And uncertainty is never ideal,” he says. The good news? If you jump into the market pronto, you just might make it before those doors close.