To be an important player in the real estate industry, it is important to stay abreast of little happenings and information that can cause a turnaround in the market situation. This can be vital in making preparations against tough times. The United States economy is one that is set to experience a rocky year and the real estate sector is not one that can remain unscathed as it is either the changes expected to make or break the industry.
In terms of calculation of the GDP of the country, real estate usually contributes a minimum percentage of 15% but this has not been the case of recent. This is due to the fact that the real estate bubble has led to the standards for lending rates becoming tight and construction companies are reluctant to dive into the unsteady foray. For players in the real estate game both old and new, this is what you should be expecting in the real estate industry as the tides roll:
There have been a lot of speculation of how changing economic tides can affect the market for real estate and this has led to fluctuations in transaction agreements as the rates keep changing. In December 2016, the interest rates for real estate projects were raised by the Federal Reserve which was the second time it had happened. This sudden increase in the interest rates has led to a lot of predictions in favor of further increases in 2017 which will cause a subsequent increase in mortgage rates. If this actually happens, it would become difficult for prospective homebuyers to acquire properties. These rates are certain to increase but the pace would be at a snail’s pace till a high of 4.3% is attached to a 30-year time frame which is better than previous rising rates.
It is expected that banks would improve the conditions of granting mortgage loans and credits to both individuals and businesses which are a good thing for the real estate industry. These banks are most likely walking in the steps of government mortgage firms such as Freddie Mac and Fannie Mae who will start the process of backing mortgages requiring large finance capital. This would make it easy for the buyers in real estate transactions to finance their acquisitions.
Homes are still going strong
Although recent research shows that the construction companies are pulling back on projects after the real estate bubble incident, this has not affected the trend of house constructions as the trend indicates that positive income increase should be expected.
Medium-sized cities are still on the rise
The current trend in data collected has shown that cities such as San Francisco, New Jersey, New York, Manhattan and New York have experienced a rise in property value owing to the fact that citizens keep migrating there in search for high paying jobs but this has unfortunately led to a toll being placed on the real estate market of the city because new construction is often unable to keep pace with demand due to geographic constraints, or restrictions imposed by local government regulations.