Interest Rates:
Many financial experts expect rates to rise by around .50% to 1.0% over the next year, most likely starting with a small hike in December 2016.
With 30-year mortgage rates currently at around 3.50%, this is not a huge setback. Although a significant increase would push some people out of the market and modify price range expectations for others, it's worth noting that in 2005 people were falling over themselves to buy and refinance at 5.50%. (And in October of 1981 home buyers were signing off on mortgages with rates of over 18% - a fact that seems almost unbelievable now.)
Political Changes:
Considering today's extreme political climate, it's a bit ironic that
neither of the two presidential candidates is expected to have a huge effect on the housing market if elected. Neither has said they want to do away with the mortgage interest tax deduction, and because real estate is no longer a crisis topic it has been notably absent from political discussions. Many housing experts agree, however, that uncertainty regarding the upcoming election has pushed some buyers and sellers into "wait and see" mode.
Supply and Demand:
Housing inventory in many areas of the country is still unusually low, and while this is expected to moderate as builders catch up from their recession slowdown, it won't happen overnight. In the meantime,
if the economy stays relatively healthy it will continue to support substantial buyer demand. Buying activity could intensify at least in the short term if people feel the need to make a move before interest rates go up significantly.
Tip: You'll often see real estate news articles mention trends in
"sales prices" and in
"sales volume" as though they were indicators of the same thing, when often they are not.
The next time you hear that "sales are down", look at what prices and market times are doing. If market times are maintaining or dropping and prices are trending upwards, this is a sign that the number of home sales is limited by short supply, not by lack of demand.
