The Causes of Changes
In the wake of the American Presidential election, the experts are expecting a rise in the inflation due to the broadly outlined economy policy of the President-elect Donald Trump. As the improvement of the infrastructure, cuts on tax will contribute to increased inflation because the worth of bonds is likely to decrease with the inflation or dread of it in the future. This means that investors would incline towards selling the bonds and the overall rate may rise. To put simply, the decreased price of the bond may increase the rates. In the American context, the loss over bond selling has reached record-breaking heights. As a result, the mortgage is increasing for the middle class.
Additionally, some of the analysts are of the view that the bond investment sector has witnessed 80% rise in the backdrop of the Presidential election of America, this is why the rates are likely to soar after the Federal Reserve meeting expected to convene in the month of December. So, if the Fed increases, the home equity line may increase in addition to mortgages. Even though the Fed has the role to control or maintain the rates, however, if the rates increase, this control will be compromised. In other words, the rates are expected to be higher than the contemporary rates and it will be further determined and shaped after the takeover of first few months by the Trump administration.
Consequence for the Property Owners
Given the nature of predictions and economy policy mentioned above, the impact of the economic forecasts will impact the property business in the following ways.
The Refinancing Options
If you are somebody who hoped for decreased rates, or if you are someone who wants to sell a home to get the investment back, this month is probably the best time to find other options rather than waiting for the lowered prices because the economic and property trends are not expected to tilt in your favor.
Home Equity Loan Rates
As the prime rate is associated with the mortgage, the prime rate will probably increase the rate of the Fed. This means that the 25% increase may be stabilized to 1% towards the end of the year. Moreover, the home equity loan rate can be secured if the loan is fixed the second mortgage.
Re-evaluation of Finances for the Home Owners
Rates for the Property of Home
Market in 2017
Even though the refinances is expected to show negative trends for the property owners, however, the home purchasing loans may see a boom or surge. For example, the estimates and property forecast show increase in the sales of home to a large extent in addition to the selling of new homes.
Focus on Urban Areas
With the advancement in the technology and transportation, the interconnectivity and commuting are becoming easy for the property in general, which would attract the attention of the buyers and sellers in the urban cities and town due to the number of opportunities and overall increased economic activity. Moreover, the real link property will be preferred by many investors due to the effectiveness and affordability of the charges associated with it.
Housing for the Middle Class
As the affordability of the houses has been a big concern for the lower income and middle-class sections of the societies for few years. Therefore, the new distinction in the housing categorization has been introduced, which is showing the signs of stress or difficulties for the middle-class clients or people interested in buying the house.
Real Estate Cycle
If one surveys the factors of stability and other essential trend determining variables of the property market, the experts seem optimistic in terms of foreseeing good changes in the market. Moreover, the financial transactions have increased and so have the prices, which may prove detrimental to the small property owners and those who are interested in buying homes. Likewise, the focus on buying new homes or the entry of the new clients to buy new homes in the market may decrease.
The year of 2016 showed the signs of the boom in small houses more than the big units which are likely to continue in the coming year as well. Therefore, if you are someone who owns a big house, it is better to start investing in the smaller houses to expand your business. Furthermore, the focus on the property located in the urban areas is growing as compared to the metro suburbs.
This trend particularly caters the needs and wants of the first time investors in the property business, as the market is likely to get more competitive due to the low turnout in terms of buying of the new homes in the property market, the new investors will increase in number that may pose a threat for the beginners in the real estate. Therefore, it is better to be adaptive in your approach to avail the opportunities and to meet your real estate objectives for the year of 2017.