Metro Phoenix continues growing into 2017. Many improvement and expansion of existing highway systems are undergoing ambitiously. Particularly the South Mountain Freeway, looping existing Santan freeway – South Loop 202 into I-10 system, is exciting and encouraging. It helps the East Valley connecting to the West Valley almost 1 hours drive less. Not just the saving of time and money for those people commute to work routinely, this project brings lots of opportunities to local business and housing market that was never possible in the past.
The third quarter showed strong economic growth and an increased GDP. As the economy continues to heat up, interest rates will be pressured to rise.
Jobless claims were slightly higher this week than expected, but still below 300,000. The strong labor market could contribute to higher rates in 2017.
Rising mortgage rates haven’t slowed down the market, as purchase applications were up 1% over 2015. Demand for housing remains strong, regardless of rates.
Existing home sales climbed in November to the highest level since early 2007. Sales increased 18.2% over November 2015 (the implementation of TRID).
FHFA’s Housing Price Index showed prices moderating slightly in October, but still rising. Prices were 6% higher than the previous year.
The real estate market appears to be on the verge of a national stabilization in early 2017, according to Realtor.com in a recently published analysis. And while the nationwide trend is one of commercial moderation, there are several metropolitan areas that seem likely to enjoy growth throughout the coming year.
There is some variation to be found from one market to the next; however, on the whole, these select cities are expected to enjoy average pricing growth of 5.8% and a 6.3 increase in overall sales. Compare this firstly to the projected 3.9% nationwide increase in home pricing, and secondly to home sale growth of 1.9% for a clear understanding of just how far ahead of the pack these markets appear to be.
The nation’s ten most promising real estate markets, as ranked by Realtor.com, are listed below:
1. Phoenix, AZ
2. Los Angeles, CA
3. Boston, MA
4. Sacramento, CA
5. Riverside, CA
6. Jacksonville, FL
7. Orlando, FL
8. Raleigh, NC
9. Tucson, AZ
10. Portland, OR
A major contributing factor in the anticipated strength of these ten markets is that of economic resilience. Each city listed above is home to a thriving business community which contributes to both continued population growth and the steady construction of new homes. As noted on Housing Predictor, “…a housing market is only strong if…the middle class community can truly afford to buy into that real estate field.”
Rising mortgage rates aren’t dampening builders’ enthusiasm for the housing market. The NAHB housing market index rose to a 9-year high in December.
The HAMP mortgage program expires December 31, 2016. It is being replaced with a new payment reducing Flex Modification foreclosure prevention program.
Rising mortgage rates are not curbing demand, as inventory remains stubbornly low. Constrained supply is expected for at least 4 more years, according to NAR.
As expected, the Fed raised policy rates 0.25% at this month’s FOMC meeting. Bond yields jumped on the news, pressuring mortgage rates higher.
The U.S. dollar is at the highest level since 2003, and stocks continue to hit all-time highs. Strong economic activity contributes to mortgage rates increasing.
The Fed is expected to continue to raise policy rates in 2017, possibly up to three times. Rising inflation and a tightening job market support this speculation.