Jeff Swensen/Getty Images; realtor.com
Can you believe we’re barely a month into 2017?! Whew! The year promises to hold more tumult ahead—but also growth. Yes, with a handful of early data points from January, I am prepared to make some bold predictions for how critical events are likely to unfold in February, shaping the upcoming spring buying season.
How quickly interest rates move this year will have an impact on the real estate market. Rates moved more than 50 basis points after the election and registered the highest average for a month in more than a year in December. (One basis point is equal to 0.01%.)
Though rates bounced around from day to day in January, mortgage rates on average were slightly lower in the month compared with December. This gives prospective buyers some stability to navigate a market with historically low inventory before rates continue their march upward.
Meanwhile, consumer confidence remains high to start the year. If we see good news on the employment front for January and a heartwarming sports story to distract us momentarily from politics, we can get closer to spring, with strong demand fundamentals for the housing market. So let’s shake up that magic eight ball and bravely forecast the (near) future!
Bold prediction No. 1: Mortgage rates will stay put—for now. Since the Fed announced today that it wouldn’t be raising short-term interest rates, we probably won’t see any movement until there are clear data points showing more significant growth and inflation. A change could come at the March meeting, but the next few weeks should be calm.
Bold prediction No. 2: Punxsutawney Phil will predict a longer winter, but that won’t deter home buyers. When the adorable groundhog sees his shadow, the legend holds that we endure six more weeks of winter. Yet, what the past 96 years of history shows us is that February ends up colder than the historical average only half the time when he’s spooked by his shadow. Even if the weather ends up colder, prospective home buyers will be out in large numbers in February to beat the spring crowds.
Bold prediction No. 3: February will see more new listings come on the market compared with last year. We’ve seen nine straight months in which fewer new listings were added to the market than the same month in the prior year. With home values on average recovered and existing owners looking to move before interest rates move higher, growth in February will give us just enough new inventory to keep supply from getting even tighter.
Bold prediction No. 4: Based on consumer confidence, the Atlanta Falcons will win Super Bowl LI. New England is the ultimate establishment team—no other team has been to more Super Bowls. In other words, the majority of people outside of New England want them to lose. Lose big. So when the Patriots win, it’s a blow to our collective psyche.
New England won the Super Bowl in 2002, 2004, 2005, and 2015. And in each of those Februaries, the Conference Board’s Consumer Confidence Index declined from the prior month. Likewise, the University of Michigan’s Consumer Sentiment Index also declined after Patriot wins.
With the power of the people behind them—along with their high-powered offense and killer defense—Atlanta will find a way to overcome the evil empire, and we will all feel better as a result. If we combine stronger sentiment with stable and historically low mortgage rates, strong demand, decent weather, and more inventory, we should see more happy buyers in the months ahead.
The post Our Economist’s 4 Bold February Predictions, From Interest Rates to Groundhog Shadows appeared first on Real Estate News & Advice | realtor.com®.
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