Looking ahead to the 2017 Housing Market
Blame it on the election cycle, the climbing interest rates or affordability, and I’ve heard it all, the central Texas housing rate of growth very clearly slowed in 2016 compared to previous years. The good news is that the Austin metro area had another record breaking year with home values and sales.
Though the housing market traditionally slows every presidential election year, I wouldn’t blame the second half of last year being slower than the previous three years solely on the election. The normalization of our market in 2016, meaning a less aggressive rate of growth, will likely continue – though check out the ‘stories to follow’ below. Let me be clear, less aggressive rates of growth in our housing market will ensure the Austin Metro Area is strong for quite some time. In fact, we’re projecting a healthy market with record breaking home sales and home values in 2017!
This year we are primed to see:
- Interest rates continue their climb upward and will flirt with 5% for a 30-year fixed
- Adjusted rate mortgages and second liens will come back to the marketplace
- Creative financing causes further competition in the sub $400k market
- Most stats will continue to climb but normalize signaling a healthier market
Stories to follow that could impact our housing market :
- Jobs Jobs Jobs: Unemployment for our MSA continues to be the lowest in the state. Though the labor department reported a loss of 2000 jobs from November to December here locally. Texas currently ranks 10th in the nation in percentage of population growth from 2015-16 and 14th in the Tax Foundation State Business Climate Index. Competition nationwide is clear as local affordability and tax climate relative to other cities is still a concern.
- What happens with the mortgage interest tax deduction? Though it’s not clear what will happen with the tax deduction as President Trump and House Republicans are not on the same page, what is clear is that change is coming. The National Association of Realtors is strongly opposed to any changes to the mortgage interest deduction.
- Long-term impact of the return of creative financing (see above).
- Other hot topics include: Water retention and distribution, the Texas Legislative Session and any changes to NAFTA.
To me, in light of all the pending change, I see opportunity across the board. If you’d like to get together and discuss the market and how you can take advantage of it, please let me know and let’s make that happen!