January 6th, 2017 9:29 PM by Regina Rickles, NMLS# 222362
The NAHB Housing Opportunity Index shows that home prices have risen year-over-year since 2012.
Home prices are now up 40% since hitting bottom in 2011.
That's great for homeowners. Not so great for home buyers.
Chasing ever-rising prices is hard to do on a budget. As soon as a buyer has a down payment saved -- say 5% -- the price on which that percentage was based has risen.
(The solution, though, is to find loan programs with low-down payment guidelines. FHA loans require just 3.5% down, while there are now a multitude of programs offering 100% financing.)
Home prices may be tempered by rising rates in 2017.
The historic election
threw markets into a state of upheaval. The stock market raced upward, and mortgage rates followed suit.
That will put pressure on affordability in the fourth quarter. Maybe shockingly so.
But, there is an upside. Rising rates might pull the brakes on seemingly unstoppable home prices. Home values have been catapulted upward by almost-free borrowing. Home buyers were getting 30-year fixed rates in the low 3s, and fifteen year rates solidly in the 2s.
That's lower than the rate of inflation is likely to be in coming years.
Cheap money makes monthly payments lower. Homes are affordable, even at very high prices.
In 2017, though, that trend could reverse. Rising payments could mean fewer bidding wars and over-market-price offers.
The everyday home buyer might have a better chance at securing a home at a reasonable price. Affordability may continue its winning streak, despite rising rates..
2017 should remain a stellar year to be a home shopper.