Hey, it’s Ryan Young with The Young Team bringing you an update on the Northeast Ohio Real Estate Market. With the start of the New Year, a lot of people have been asking me, “What will happen in the real estate market this year?” Well, today I’ll be making a few predictions for the 2017 market, as well as recapping 2016.
2 MAIN TAKEAWAYS FROM 2016
- Strong 4th Quarter of 2016
We ended the year the way we started it with modestly increasing home value growth and lower inventory to soak up the demand in the market. Ohio’s statewide housing market experienced its busiest November since the Ohio Association of Realtors started tracking sales in 1998 with sales up 12.3 percent over November 2015’s levels. We think we saw this rise based on the healthiest job market in years combined with rising interest rates, which got more buyers moving in the recent months.
- Rising Loan Interest Rates
As we closed out 2016, the biggest news was the Federal Reserve’s increase in mortgage rates for only the second time since 2006. The Fed’s rate-setting board predict there will be three more increases coming in 2017, causing mortgage rates to rise. Typically, when rates start to go up, buyers will come out of the woodwork earlier in the selling season to try to lock in lower rates while they can.
WHAT IS THE MARKET’S 2017’S OUTLOOK? 3 TRENDS WE CAN EXPECT.
- Increased Market Activity
Rates are expected to keep rising in 2017 if the economy continues to improve and inflationary pressures increase. I’m predicting the early part of this year to be filled with a brisk pace of not only homes going under contract more quickly, but also taking less time to reach a settlement date so buyers aren’t subject to their rates expiring before they close on a home.
- Expanding Lending and Loan Limits
Even though rates are on the increase, mortgage credit will likely be more widely available due to slightly looser lending standards by the Federal Housing Finance Agency. The increase of the conforming loan limits is the first time these have changed since 2006. Federal Housing Administration loan limits are also expected to increase slightly. Both of these increases reflect rising confidence in consumer ability to repay larger loan amounts and will provide buyers with more options when it comes time to choose a home.
- Growth in Cleveland
With high cost of living in larger cities, more and more our younger generation is attracted to medium-sized cities like Cleveland, which provide housing affordability and a lower cost of living. We’ve been seeing a steady rise in investment and insurgence in city’s urban core over the past six years and millennials seeking cheap rents and lower asking prices are attracted the bustling development of Downtown and the Near West Side. Expect that trend to continue in 2017.
The Cleveland-area market is proving to be a strong market into the New Year, and there is so much momentum from the buyers and the lenders that 2017 should see enough activity to maintain a healthy balance. If you have any other questions about our real estate market, just give me a call or send me an email. I would be happy to help you! Have a great 2017!