According to the latest research, the housing market is finally recovering. What’s surprising is that the stabilization has happened in spite of recent increases in mortgage rates. Nonetheless, the labor market still struggles. Experts claim that new property sales are the secret ingredient that lead to a growth in economy. Investors are feeling hopeful as this will lead to an economic expansion, making it more sustainable. Furthermore, economists have recently forecasted that new home sales will keep increasing; sales are already 12.8% higher now than in 2016, which is a clear sign that the market is resilient in spite of a reduced affordability.
At this point, a fixed mortgage rate is somewhere around 4.3%. Prices for homes have risen to 5.7% in January as compared to the percentage from 2016 (the same period). Chief economist David Berson argues that increasing mortgage rates won’t impact the increasing demand for homes recently happening in February. On the other hand, the Labor Department initially claimed that unemployment rates are going down, meaning that increasingly more US citizens will be able to apply for a mortgage and invest in property.
Investment potential in the housing market
At this point, stocks are trading higher on Wall Street. The PHLX index has dropped 0.7%, meaning that more investors are feeling confident about investing in real estate once again. There’s a shortage in available properties, but still the inventory increased 1.5%. Even though the percentage doesn’t get near to the boom in 2006, it’s still a good sign that the market is recovering.
2016 was a good real for the real estate market. In October, mortgage rates dropped to a staggering 3.5%. Following the election of Donald Trump this year, experts have high hopes that things will improve even more by the end of 2017. At this point, the US economy struggles due to transition turbulences in the economy. Nevertheless, equity for homeowners will increase, and new homes will soon become available for buyers and investors.
It’s no secret that home values have increased. It has been this way since December 2011. Zillow argues that the general value soared 6.2%, the median price being $191,200. For more than a decade we’ve seen prices go up and down, although experts argue that by the end of 2017, the increase will stop at 3%. That remains to be seen since President Trump hasn’t yet provided any clarity until now.
After the real estate bubble, housing starts went from $750,000 back in 2012 to 1.16 million in 2016. However, the shortage still remains and it must be remedied. 35% of the market is made up of first-time homebuyers, who are willing to pay about $182,000 for a home. The numbers are lower, as in October 2016, the price was somewhere at $300,000. For a homeowner to sell his home at a higher price, they must sell, and studies have shown that the willingness to do so has increased.
The current housing situation in the US sums up hundreds of thousands of transactions that make up the global real estate market. It is important to keep an eye on the trends, but it is just as important to examine your financial situation prior to investing. Realtors agree that the expansion for new homes begins now. The decreasing mortgage rates, increased equity, and loosening of lending standards will keep fueling the property market by the end of 2017.
And yet, in spite of promising numbers, there’s no way of knowing for sure what will happen by the end of the year. There’s no doubt that a certain level of health in the housing market exists; but there’s risk involved, too. If you’re looking for property for sale, it’s very important that you take precaution measures.
Investing in real estate is still one of the safest forms of investment. Choose your location wisely before spending any money, and consult with an experienced realtor to help you make sensible predictions. Don’t buy property that looks good only, and look on the inside too. Maintenance costs are hefty, not to mention that a location with no growth potential can pose many other challenges.
Image credit: Ines Hegedus-Garcia