The economy of the United States is heavily dependent on its real estate sector, 'housing' comprises 15 percent of America's GDP. The bubble in the real estate sector has resulted in the tightening of lending standards. Builders have also become cautious than ever before. The new year, however, may change all that. A few key trends may emerge in 2017.
Rates may rise
The Federal Reserve upped interest rates in December for the second time. The first time was in 2006. The rate-setting board of the Federal Reserve has predicted that three more increases can occur in 2017. Such decisions will result in the rise of mortgage rates. This will make harder for the prospective home-buyers to buy their dream homes. According to Nela Richardson, the chief economist of Redfin, it is expected that the mortgage interest rates will go up. However, the rise will not surpass 4.3 percent on the 30-year fixed rate. The amount continues to be an excellent deal when compared to previous financial history.
Even in the middle of increasing rates, there will be widespread availability of mortgage credit due to relaxed lending requirements. It is probable that Federal Housing Administration will lower the fees charged to home buyers who purchase residences for the first time. This will be the continuation of the trend started by Obama administration. The latter lowered the fees in 2015. Freddie Mac and Fannie Mae, the government administered mortgage companies will start to back bigger mortgages for the first time in more than a decade. This makes it easier for home purchasers in dearer markets to have finance for the properties they buy.
Increased number of new homes
One thing is clear, home construction trend is positive. The median yearly rate of construction of new homes has reached a rate of 1.163 million until now. It is a rise from the five percent from 2015's 1.108 million.
Presence of medium-sized metropolises
The young employed are now snapping up properties in medium-sized metropolises. Although these urban areas may have not equal employment opportunities, their housing remains extremely affordable. Medium-sized cities like Fort Collins in Colorado, and Raleigh, N.C have witnessed an increase of building permit issuance over the past six years. Customers flock to them due to lower prices and cheaper rents.
It also helps that foreign buyers have now made an entry into the American property scene. Chinese buyers are more apparent, with their proclivity of skivvying away their wealth from the repressive economy back home.