A new year always bring hope that things will get better and that’s no different in real estate. But this year, you need to add the uncertainty posed by a new presidential administration. Case in point: The FHA was scheduled to initiate a rate cut for its Private Mortgage Insurance that would have made it easier for homebuyers to get FHA loans. President Trump canceled that rate cut, preventing many buyers from taking advantage of the lower rate.
Despite this uncertainty and the difficulty of predicting the future to begin with, a few pundits have weighed in on what 2017 holds for Orange County real estate. Whether these forecasts will mean good or bad news for you can depend on whether you’re selling your old home and/or buying a new one.
Home prices will increase.
Chapman University predicts an increase of 39,000 jobs, or 2.5 percent, for Orange County in 2017. Improving employment in the county points to more families arriving who will need a place to stay. In addition, many millennials who previously moved in with their parents when they graduated are now spreading wings into the real estate market. Trumps planned economic stimulus should also improve the jobs market.
The result of all this activity is a further increase in home prices. Realtor.com forecasts a 6.9 percent jump for the Los Angeles, Long Beach, and Anaheim area. The California Association of Realtors sees a smaller increase of 3.2 percent for all of Southern California. Zillow predictions for Orange County are at 1.8 percent over the current OC median home value of $672,700.
Such increases bode well if you’re planning to sell your home, particularly later in the year, when prices will be higher. However, if you’re planning on buying, do it sooner before prices have risen, rather than later. Although the increase may be relatively small, it may be enough to put a home out of reach, if you’re on the border for affordability.
Mortgage rates will rise.
In 2016, according to Bankrate, rates for the 30-year fixed-rate mortgage started out at 4.15 percent before dropping to below 4 percent by the end of January. Rates held steady or dropped to a low of 3.52 percent in early July. The rates were then firm for a few months but showed a sharp rise after the presidential election to over 4.25 percent.
The Mortgage Bankers Associate sees rates continuing their climb, averaging about 4.7 percent by the fourth quarter of 2017. The National Association of Realtors sees a similar average at about 4.6 percent by the end of the year.
Mortgage rate hikes are not good news for anybody in real estate. Home buyers are able to afford fewer homes and home sellers will see their pool of potential buyers shrink. Buying or selling early in the year can avoid the brunt of these disadvantages.
More housing will be built.
New housing construction has been increasing in Orange County for the past six years and the trend will continue for 2017. Chapman sees new housing permits reaching 11,602 in 2017, up from about 11,262 last year. This should slightly ease the housing shortage, although buyers of used homes may still find it difficult to find properties. To cope with home-building increases, OC construction jobs should increase by 3.5 percent in 2017 and by 7.7 percent in 2018, which is faster than any other sector.
We will be part of this building boom, with new communities like Newbury in Yorba Linda, Candlewood in Whittier, and Castella in Norwalk. If you’re interested in any of these developments, either contact us or the managers at specific builds as soon as possible to find out what homes will be available and in which locations. If you wait until after the developments are built, the choicest parcels may already be sold.