FREDDIE MAC: AFFORDABILITY TO HOLD BACK HOME SALES IN 2017
Source: Housing Wire
Affordability is beginning to take its toll going into the home-buying season, according to the March Outlook from Freddie Mac.
Home prices continue to rise, increasing 76 percent from 2000 to 2016 while per capita income increased 72 percent during that same time period.
And the squeeze in housing inventory is sending home prices even higher, creating declines in affordability and putting a pinch on prospective homebuyers, according to the GSE’s report. Many homebuyers will be sidelined this spring home-buying season due to these affordability constraints, and Freddie Mac predicts home sales will fall to an estimated 5.9 million in 2017. This is down from 2016’s 6 million home sales.
Freddie Mac also predicted a drop in mortgage originations of 25 percent, however the report showed this will come almost entirely from plummeting refinances. However, rising home prices and historically low interest rates could still entice homeowners to tap into their equity through cash-out refinances.
Southern California continues to see low inventory in many communities. Home prices are climbing with multiple offers being submitted on properties with sale prices exceeding list prices. Low inventory coupled with higher interest rates will continue to force home buyers to the sidelines. If you are thinking about purchasing a new home now is the time before higher rates make it impossible.
Published on 2017-04-07 15:23:00
