In the following commentary, Lennox Scott, chairman and CEO of John L. Scott Real Estate, offers his 2017 housing forecast for the Puget Sound market.
What an exciting time in real estate! 2016 was one of the best years ever, and I predict 2017 is going to be just as incredible. Strong job growth, amazing interest rates and a shortage of inventory will continue to fuel home appreciation and sales activity. We expect to see 8 percent price appreciation in the more affordable and mid-price ranges in all market areas. We are heading into the new year virtually sold out of inventory. We’ll see huge price appreciation after the first part of the year, as well as robust sales activity.
Buying or selling a home in 2017 will require strategic planning and research. When will be the best time to sell? How can buyers win a home in such a competitive market? How will the luxury market fare? How long will the hot market last?
Job growth is the No. 1 indicator to a strong housing market, and for the past three years, it’s been “extremely strong.” Looking forward, it is being predicted that job growth will drop slightly to a “very strong” level over the next two years.
Amazing interest rates are still in play. The Federal Reserve is on track to raise interest rates slightly through the end of 2017. The National Association of REALTORS® predicts that by the end of next year, we will see interest rates around 4.6 percent, still in the amazing and historically low range.
Once again, we will start the year out with a severe shortage of inventory in many areas. The market will continue to be competitive, with multiple offer situations being the norm on homes in the more affordable and mid-priced ranges.
The housing market will continue to be challenging for buyers looking for homes in high-demand areas. In order to compete with other qualified buyers, you need to position yourself to the lead the pack. The best strategy you can employ is to be Buyer-Ready, Day-One™—that means either being fully underwritten for a mortgage and/or leveraging your buying power with cash. A great start to the process leads to a great finish.
When is the best time to sell? When the timing is right for you. Selling and buying within the same market timing is okay no matter what time of the year, whether over the winter when the sales activity to new listing ratio is at its highest, or after the first part of the year when you’ll see a boost in price appreciation. Depending on when you buy or sell, you will end up with approximately the same net asset position. Review your individual financial objectives, seasonal advantages, and your timing considerations to find your right time to move.
As you can see, the real estate market will continue to be very complex in 2017. How long will this “frenzy” market last? It depends on the job growth of a local economy, the national economy and mortgage interest rates. We foresee that as rates increase slightly, and job growth comes down off of extremely strong to just very strong, price appreciation will continue to remain positive, albeit at a lower, more reasonable level, starting in late 2017 going forward.
In order to successfully navigate the market, buyers and sellers will need the expertise of a seasoned real estate professional who has an arsenal of strategies and tools for success.
Lennox Scott is chairman and CEO of John L. Scott Real Estate (JLS), a Western Regional firm with over 110 offices and more than 3,100 broker associates in Washington, Oregon, Idaho, and California. JLS is the fourth largest regional real estate company in the United States and completed over 36,000 transactions last year. Lennox was recently awarded the National Association of REALTORS® Emeritus status honoring his 40 years in the real estate industry.
For more information, please visit www.johnlscott.com.
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