I don't have a crystal ball, but I like to share what I see in the trenches of residential real estate sales every day. To keep things short and sweet I want to point out 3 major changes that we will see in 2017. We will see slightly increased mortgage rates, slightly increased inventory, and continued price growth that slows to be closer to normal.
That sounds scary, but it means that we will see a return towards normal from the rapid price growth and comically low interest rates that we have seen for nearly half a decade.
Lets dive a little bit deeper into those three changes.
1) Increased Mortgage Rates
We are looking in our rear view mirror at the days of getting mortgage rates under 4%. That is too bad since 4% was such a strong mental barrier and I really enjoyed representing clients buying homes with FHA loans that had rates under 3.25%. The big jump from rates in the mid to upper 3's came with the election. The Fed rate hike in December (this doesn't directly correlate to mortgage rates) didn't have a huge impact, but the Fed will likely do a couple more quarter point increases in the next year. Don't be surprised if mortgage rates approach 5% by the end of 2017. Keep in mind that historically, anything under 6% is considered a smokin' good interest rate.
What does this mean? Well I think it will bring an influx of buyers in the short term. When rates spike, people that were on the fence tend to get off of the fence and make a move. As we come into Spring things should calm down.
2) Slightly Increased Inventory
As of this writing, there are 2170 active listings and 1854 listings under contract in Salt Lake County. Escrows tend to be 30 to 45 days so this stat tells us that homes sell quickly. The pending/active ratio is really quite high. Again, homes sell quickly. 2170 active listings is very very low. A couple of months ago we had more than 3000 and we even considered that number to be limited inventory.
The sudden drop in inventory came with the holiday season. There is always a bottleneck of buyers that enter the market at the first of the year.
What does this mean? Well not a whole lot. Inventories increasing to 3100+ is a return to normal from what we have seen in the last few years where there are significantly more buyers than sellers.
3) Continued Price Appreciation But Trending Back Toward Reality
The average home price on the Wasatch Front is the highest it has ever been. We have some of the fastest growing cities in the country on the Wasatch Front. South Jordan came in as the #5 fastest growing city in the country per the census and there is limited area to build. A strong economy and immigration are a great thing, but keep in mind that much of the rapid price growth is due to limited inventory. The limited inventory created a lot of multiple offer scenarios (bidding wars) and a lot of buyers willing to pay above market. Appreciation is going to slow from the fast paced near 10% kind of numbers that we have seen in the past year. However, I think it will still be on the high end of healthy.
So is it a good time to buy? A good time to sell? I am going to give what might seem like kind of a cop out answer. It is a good time for both. Or maybe a better way to say this is that it is a good transition period. It is easier than normal to sell houses in the current sellers market, rates are still low, and inventories should increase to make a purchase less frustrating.
If you are thinking of upgrading homes this is a great time to do it. Rates are still low and everything points to having a great investment on your future dream home where appreciation will bring more financial gain in real terms.
Thoughts of upgrading? Our objective is to net you the highest possible proceeds in the least amount of time with the least amount of problems and we have a PROVEN TRACK RECORD. Also happy to help you find your dream home. Give me a call at 801-712-9748, email me at [email protected], or SCHEDULE A CALL to get started.