Clients and Friends,
As we look ahead to the real estate market in 2017, we have gathered several items from various sources summarizing what the coming year may look like.
In general, the sources seem to agree that the local real estate market will continue to be strong and be much like 2016. Some of the changes to look for:
- Interest rates will go up. They currently are hovering around 4.3 to 4.5%, up from 3.5% during the middle of 2016. They are predicted to reach around 5% by the end of 2017, with 6% by the middle of 2018. Even at 6%, a bargain, compared to the rates of 30 + years ago.
- Housing inventory will be a bit better, but still considerably under demand, thereby driving the prices up. Predictions vary from 6-10%. The median North Texas home price is up about 40% over the past five years.
- Job growth in Texas is supposedly the best in the nation. Texas generated over 160,000 jobs in 2016 and several sources have predicted that could reach up to 240,000 in 2017. The North Texas area is growing by about 200 people per day. They will need some place to live.
- Dallas Ft. Worth leads the Nation in home starts, but that is still almost 40% below that of the pre-recession levels. Builders face shortages of land, escalating land prices, labor shortages and increased labor costs. All of these translate to subdivisions being more remote from workplaces and challenges to new home affordability. Builders have opted to focus on more expensive house due to their profit squeeze and the resulting affordability has suffered. First time home buyers have borne the brunt of the lack of less expensive homes. Unless a buyer is willing to drive a long distance to work, a new $200,000 home is almost nonexistent in North Texas. The labor issue could get even worse as the new administration sorts out the immigration issues.
- It is reported that about 32% of the homes purchased in the area in 2016 were purchased by Millennials. So based upon the above, a great percentage of those were older homes with more affordable prices, which often come with attendant repair issues. Unfortunately, the inexperienced buyer will often not know what to look for in an older home which can need expensive repairs. That makes it imperative that they have an experienced Realtor and Inspector to assist, consult and protect them in their home purchase. For instance, a foundation repair could easily range from $3,000 - $25,000. A new roof can run between $5,000 - $12,000. A complete air conditioning and heating system (HVAC) can cost $5,000 - $8,000.
- So what does all the above mean to you?
If you are looking to sell your home, 2017 is a great time. The sooner the better. 2018 predictions range from a housing bubble bursting to a gradual softening of sales prices and with the interest rates up, the buyers may be more scarce thus perhaps lengthening the average days on the market prior to a contract.
If you are a buyer, the inventory in 2017 is predicted to be even tighter than it was in 2016. This would indicate multiple offers, which drive prices up, making affordability more difficult. Therefore, stay close to your mortgage lender, because with rates up and prices continuing to escalate, what your lender told you that you could afford six months ago, may have now changed.
If you have any questions or need a good vendor for repairs, TEAM-PRZADA is as close as your cell phone.
Happy 2017 and we look forward to hearing from you.
Pat and Nancie,
Pat Przada , CRS, ABR, CNHS, CNE, SRES
Nancie Przada, GRI, ABR, CNHS, SRES
Licensed Texas Realtors
Keller Williams Realty
A Five Star Professional Realty Team
as noted in May 2012, 2013, 2014, 2015, 2016 Texas Monthly
Top 50 Plano Realtor as selected by Plano Magazine 2015