Real estate represents a significant portion of most people’s wealth, and this is especially true for many homeowners in the United States. According to a recent Survey of Consumer Finances by the Federal Reserve, 65.2% of American families own their own primary residence.
With home prices zooming at 11% after hitting rock bottom in 2011, it’s not a very rosy picture for budget- oriented home buyers. Many of them have saved up for their down payments, only to be told they would have to hand out some more as the cost of the house on which the percentage of down payment had been chalked out, was now up. The recent US elections resulted in stock markets rising, and mortgage rates following suit – as markets went into a tizzy. The result? Lots of pressure on real estate, and house pricing looking upwards. However, the good news is that rising lending rates might surprisingly lead to a fall in home prices. The fact is that home values were high on account of almost free-borrowing where home buyers were getting 30-year fixed rates in the low 3’s and fifteen-year rates solidly in the 2s, which is lower than the likely rate of inflation to come. So though prices were high the availability of easy borrowing made house purchase affordable. In today’s scenario of rising payments, the effect on the price of housing can be positive. Rising payments would mean fewer bidders and over-market-price offers. The beneficiary would be the home buyer who can still secure a home, at a reasonable cost. So though affordable housing will be driven by different factors in the mortgage market this year, buying a house would be possible in 2017 for the average home buyer. Indeed it may be even cheaper.Get to know more about real estate valuation here.
Trends to watch for
In general, some of the key factors influencing real estate prices include demographics i.e. composition of a population, such as age, race, gender, income, migration patterns and population growth, changes in interest rates by mortgage companies which can create or lower demand , overall health of the economy which is measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods and legislation which can have a sizable impact on property demand and prices.
Investors and homeowners looking for the next hot property market should keep an eye on two leanings: jobs and affordability, according to a recent research from PwC and the Urban Land Institute highlighting Emerging Trends in Real Estate in the US. The report was based on economic data and survey responses and interviews with property investors, developers, brokers and other professionals involved in the real estate business. Mitch Roschelle, a partner and real estate research leader at PwC, has been quoted as saying that some of the cities that landed near the top of the list in past years had fallen in this year’s ranking due of affordability issues. San Francisco which ranked No. 2 just a few years ago had fallen to 10th place because of high costs.
Go for a Real Estate Valuation
Before going in for the big haul you may enlist the services of a professional organization for real estate valuation, which is needed to determine the estimated market value of a house, as is a common practice in the case of commercial property or vacant land, where a commercial real estate appraisal is conducted before purchase.