Housing Trends in Today's Political Climate

Posted by Gabrielle Fuqua on Wednesday, February 8th, 2017 at 5:19pm.

What's New?

Life’s one constant? Change. Post-presidential inauguration people are asking “What’s next for the housing market?” Let’s take a look at the what’s happened so far and how experts expect housing markets to react in the next year.

Uncertainty

Much depends on what policies are put into place. For instance:

  • Higher tariffs could increase inflation, keeping interest rates low
  • Limiting migrant workers US entry could raise construction costs 
  • Isolationist policies may push investors into domestic real estate 

Interest Rates

The Fed announced a rate hike in December 2016 and forecasted three more in 2017. Rates are still very low, but every point matters. 

However, rate hikes are unlikely if the Fed sees a need to keep inflation in check. Buyers should keep a close eye on rates to preserve their buying power.

Bond Market Effect

Stocks initially favored the Trump Administration’s pro-business platform having seen gains since the November election. Growing stock prices could give American investors a leg up on down payments for a new home. However, the recent announcement regarding possible Mexican tariff increases to fund the border wall has given investors pause. Again, uncertainty prevails. 

FHA Loans

On the first day of the new administration, an executive order suspended an FHA fee reduction on mortgage insurance. The discount, which would have saved an average of $500 a year for over 1 million FHA loans, was originally put in place by the Obama administration. 

According to the National Association of Realtors (NAR) 30,000 to 40,000 people will now be shut out of homeownership, many more will be looking at less expensive homes to make up the difference. 

Local Level

The low-inventory trend in the local real estate market hasn’t shown signs of lighten up, still making the Front Range a Seller’s market. However, Buyers waiting for a slower market may likely find themselves paying higher interest rates on higher priced homes.

 


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