Will The Seller's Housing Market Continue?

Over the past year, the greater Salt Lake City area has seen a strong seller’s market for housing – thanks in large part to a shortage of homes on the market, strong demand by buyers and mortgage interest rates that hovered near historic lows. But as 2017 gets underway, the question is whether that seller’s market will continue, especially given a recent uptick in interest rates.

Although mortgage rates remain relatively low by historical standards, the sudden increase in rates is one of several factors that could impact the housing market in the coming year: Will low inventory levels begin to rise? Will the job market remain strong and continue to grow? 

“2017 is probably going to skew more toward the seller’s market,” Svenja Gudell, chief economist at Zillow, told Inman. “Most markets will skew more toward seller’s markets, and even in the Midwest there are probably more seller’s markets than buyer’s markets compared to their own history.”

The economists did project that inventory levels will likely rise in 2017 and new construction will pick up as well, giving frustrated buyers a bit more to choose from. The upshot is that sellers might find that it will take a little longer to sell their property this year than it did in 2016.

However, the increase in listings and construction probably won’t be enough to offset pent-up demand from buyers as long as the job market remains strong. The National Association of REALTORS® publication, realtor.com, said the days of multiple offers and bids well over the asking price probably won’t go away in 2017 – although they may not get much worse from a buyer’s standpoint.

Citing rising mortgage rates and a shortage of affordable homes for sale, realtor com projected a smaller increase in sales in 2017 than last year and slightly slower price appreciation of about 4 percent on average nationally, down from 5 percent in 2016. “2017 will be a year of growth in both sales and prices, but that growth will be slower than what we’ve seen over the last three years,” according to Smoke.

No one knows for sure what will happen to interest rates or the housing market. But if you have been thinking about buying or selling your home, now may be a good time to make your move before rates go higher and while demand for housing remains strong. If you have any questions about the local housing market, please give me a call or send me an e-mail. I’m happy to help.

Best wishes on a happy and healthy new year!
Rosa Pace

Outlook for 2017: Will Seller's Housing Market Continue?

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HUD Lowers FHA MIP

Mortgage insurance premiums on FHA-backed loans will be lower by 25 basis points on loans endorsed starting January 27, the federal government announced today.
“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” Julian Castro, secretary of the U.S. Department of Housing and Urban Development, announced today.

NAR President Bill Brown praised the move. “Dropping mortgage insurance premiums will mean a lot more responsible borrowers are eligible to purchase a home through FHA,” he said. “That puts more money in the fund to protect taxpayers, and it puts more families in homes so they can live out the American dream.”

The new premium schedule, which takes effect for residential mortgage loans that have an insurance endorsement date on or after January 27,  is expected to save the average home buyer $500 a year in insurance costs.
In its announcement, HUD said the reduced premiums reflect the healthy state of HUD’s mutual mortgage insurance fund, which is the agency’s principle fund for insuring FHA mortgages. “We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers,” said Edward Golding, HUD principal deputy assistant secretary for housing. “This conservative reduction in our premium rates is an appropriate measure to support [home buyers] on their path to the American dream.”
Under the new schedule, a home purchase with a base loan amount of up to $625,000, with an 85-percent loan-to-value ratio and a 30-year loan term, will require an annual mortgage insurance premium of 55 basis points, down from 80 basis points.  A 15-year loan of that same amount and with a 90-percent LTV ratio will require an MIP of 25 basis points, down from 45. Access the full schedule.
NAR is calling on FHA to take even more steps to help home buyers, including eliminating FHA’s “life of loan” mortgage insurance requirement, which forces borrowers to maintain mortgage insurance regardless of their equity position. Borrowers with traditional mortgage insurance can typically extinguish their mortgage insurance once they reach 20 percent equity in the property. “Our work continues, but we’re encouraged by today’s announcement,” Brown said.
—By Robert Freedman, REALTOR® Magazine

Voice for Real Estate 59: Carson, Loan Limits, 2017 Legislation