Buying a house in 2017 will feel kind of like you’ve jumped onto the subway just as the doors were closing. Your heart’s pounding and you’re winded from the race, but you made it—just in time.
OK, so maybe that’s a little exaggerated. But here’s the thing: Interest rates have begun to rise and will likely climb higher. Inventory is low and could shrink more. And home prices? Well, home prices are increasing—and they’re not predicted to fall any time soon.
If you’ve been toying with the idea of buying, or you anticipate a life change that might force you to move—such as a new baby or a job transfer—you should be buying as urgently and as soon as possible. Here are a few reasons why.
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.
Another upside: When rates go up, competition and prices often go down.
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.
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.
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, and uncertainty is never ideal.
The good news? If you jump into the market pronto, you just might make it before those doors close.
If you’re interested in buying or selling a home in the Las Vegas area, contact us today at 702.545.0020 to learn more!