If you are like me you are surprised we are at the end of the year already, but the good news is that the real estate market fared well this year, and will likely continue to do so in 2017. Here are my annual predictions for the market, at least here in San Diego County:
1. Home inventory will remain low. Due to a combination of factors – rising interest rates, expenses of moving up and difficulty of finding replacement housing, many potential home sellers will likely choose to remain where they are and not sell. This trend defined the market in 2016 and I believe it will continue. Until Americans see how the new President will affect the market I am betting on this.
2. Prices will stabilize for the most part. 2016 saw prices still rising slightly in some areas, and higher in others (especially in summer months), but for the most part things seem to be leveling off. I think we will return to “normal” annual price appreciations of 5-7%. Of course this is always area-dependent so check with your local realtor for market statistics and area comparables.
3. Market times will decrease or remain low for desirable homes. Due to the continuation of lower inventory levels I believe we will see desirable homes sell quickly. But I also think that buyers are very savvy and will not pay crazy high prices either – although in a multiple offer situation you never know.
4. First time buyers could have a difficult time with competition. As interest rates rise, inventory levels decrease (or remain low) and prices remain high, many first time home buyers may find themselves in challenging situations when looking for homes to purchase. Competition will also factor in, especially in areas where there is an influx of repeat homebuyers who are moving up and are well qualified (with large downpayments). My advice is for those first time buyers to get preapproved and start looking now. Click here to read more on how to “win” that home you want.
5. Interest rates will rise. This is inevitable and we have already seen the beginning of the end of the lowest interest rates in history. The new administration will also play a role in the interest rate rise as economic goals fluctuate.
The bottom line is that I believe the housing market will do well in the coming year. I do not predict any “bubbles” as some (very few) have done. I think here in San Diego County our market is strong and will continue to be as we head into 2017.
As I always say, if you are thinking of buying or selling in the future you need to do your homework and start early – even a year is not too early. Study the markets, visit homes for sale, get to know inventory, neighborhoods and floorplans. Talk to a mortgage professional and plan ahead. Find a great local real estate agent and let him or her keep you informed so you are ready to go when the time is right. Be prepared and have a wonderful new year!