What to Expect with Real Estate and Rate Change?

With the New Year, significant changes were expecting as usual with 2017 that will play a major role in buying and selling a home. With the low inflation, 2017 was projected to be a great year for the housing market. As compared to the year2015, the US Census Bureau reports that the sales of the home are over 12 percent, but the current rates are hardly up to 5%.

Since Trump has been elected as president, the mortgage rates boosted over half percent by creating caution for the sellers as well as homebuyers. According to people, it was considered as a short-term e-credit effect, but it actually lasted up until now because of the new administration on the housing market. 

If you still think that it is the right moment where real estate market will get a spark, then you are wrong. According to the Janet Yellen who is the Federal Reserve Chairwoman said on March 3rd in Chicago that FED will resume the interest rates which will get higher at the end of this month. FED was expecting steady improvement in the economy, which will help to justify the additional rate. Dr. Yellen notified that there would be total three hikes in 2017.

The next meeting of FED will conclude on 14th and 15th March. The meeting will discuss and evaluate the inflation and employment, which will continue to evolve. Federal funds will surely propose an idea for the adjustment according to their expectations. According to the personal bias, FED rates will rise with time.

The Chief Investment Officer of Commonwealth Financial Network Brad McMillan said that according to FED, the economy is not moving well, but it will likely do better as it goes forward. FED only seeks evidence during the growth, which makes the results undeniable. The ECB is looking to purchase stocks because it is running out of public and corporate bonds.

Commercial Real Estate Market

The imminent financial implosion will not target banks but will concentrate on Pension Plans, Endowments, Trusts, Insurance Companies, small banks as well as credit unions. These companies have invested considerable amount on their assets in any form of US commercial real estate. It is true that cheap debt depicts the investment sales and Federal Reserve have kept the rates of interest low so that it will last forever, the interest rates will start to climb unexpectedly and quickly which will put pressure on the real estate investors and their associated assets. However, if FED maintains the status quo, the housing market will be stable for a long time.

Home Values

The values of home were rising from 2011 and according to Zillow reports; the values of a home increased to at least 6.2 percent but again got a normal growth rate in the year 2017. It is true that the past 12 years proves to be a roller coaster for the real estate market values because there were highs, lows, slow down and jump-starts. Trump must need to make some effort to create clarity and to provide stability in the economy. Since his joining, the buyers, sellers, and investors are already sitting on the edge and don’t have enough confidence to jump in the housing market and make the values higher.

The Fitch rating company states that if the interest rates keep on increasing more than expectation, then borrowers will get dishearten and not be able to refinance. US Capital Trends show telecasted that last January the volume of the commercial property just fell which is around 47%. It is reported as the sharpest decline during the 2009 downturn. However, the wise real estate investors are trying enough to reduce the holdings and believe that US commercial property will come to a halt in the coming years.

The Senior Analyst Peter Rothemund said that the prices of property had reached its peak, and the cap rates are getting higher, but the growing rental income has given people a reason to re-think because values are still steady.

Many individuals or analysts have said that game is not over yet because many new opportunities are waiting for the US. Gold will set up, and the precious metals and the currency will surely be high in demand. The US will still be in the right and upper class. The rates of gold are still flying. No matter where the markets are trading, focusing or going, the momentum trade will move in one direction by providing significant gain. The lending standards will continue to loosen up; the new homes will expand, home values and equity will grow, and mortgage rate will continue to increase throughout 2017 because of real estate market. It is important for everyone especially investors to follow the national trends. Optimism is also necessary which must go hand in hand to overcome fears.