Where are Interest Rates Going in 2107?

Interest rates, which have been historically low in the past few years have started their way up and are expected to move in an upward direction throughout 2017. As rates continue to increase in the coming year it will adversely effect the market in a number of ways:

  1. Purchasing Power
  2. Increased Inventory
  3. Increased Number of Days on Market for Existing Inventory
  4. Downward Pressure on Home Appreciation

Purchasing Power:

As rates continue to increase this year, expected to move 2 to 3 more times over 2017, the amount a buyer can afford will decrease. This will mostly affect the first time home buyer the most. Home Values have also increased over the past few years, and as they continue to increase with rates also on the climb some buyers will begin to become priced out of the market.

Increased Inventory:

The number of homes selling each month will start to decrease as rates increase. Again, there will be fewer buyers for the property that is available. Add that with the increase in amount of new home starts and the amount of new sellers expected to hit the market in the spring, we will see increased inventory that will start to affect home prices and days on market.

Increased Number of Days on Market for Existing Inventory:

As interest rates continue to increase in the coming year. The amount of days on market for current homes on the market will start to increase. This is something that many will not notice immediately, however over the next few months we will start to see homes sitting on the market longer, as there will be fewer and fewer buyers able to purchase.

Downward Pressure on Home Appreciation:

As we start to see supply increase, it will and always had an adverse effect on demand. With less demand we will start to see more of a flattening and stable market. Not to say that the days of multiple offers are over, especially not in some areas, but buyers will have a lot more choices as they are searching for their new home and in some scenarios the only way to compete and make your home stand out from the competition will be price.

Your Friend in Real Estate,

BB



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