What will happen in the 2017 real estate market? I will share my predictions with you today.
Although I don’t have a crystal ball, there are a lot of market indicators that show where the housing market is heading in 2017.
Interest rates seem to be on everyone’s mind. As interest rates go up, so does the cost of your home and the monthly mortgage payment. For every point that an interest rate goes up, your affordability goes down by 10%. Rates may go up a full point over the next year, so your buying power will decrease as 2017 progresses and rates go up. As a result, there is no better time to buy a home than right now.
The other big question everyone is asking is, “Where will appreciation happen? Where is the best place to buy?” It really comes down to location, location, location. In Minneapolis, Northeast is a great up and coming neighborhood. Home values are increasing so rapidly there, though, that appreciation might not be sustainable. In St. Paul, the Highland and Mac-Groveland neighborhoods both continue to appreciate.
If you look at the suburbs, appreciation there is getting kind of flat. That’s partly because the Twin Cities saw its highest average sales price ever this past June. Those areas have fully recovered and the suburbs are not going to see the same kind of appreciation as they did back in 2014, 2015, and 2016.
As interest rates go up, buying power goes down.
I recommend that you pay attention to those outer, fourth-ring suburbs. Many of those suburbs have not reached the peaks they saw in 2006. Those first-ring, second-ring, and third-ring suburbs have fully recovered, so if you want the best bang for your buck, buy a house in one of those fourth-ring suburbs.
Those are my predictions for the 2017 real estate market. If you have any questions, give me a call or send me an email. I would be happy to help you!
