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It’s amazing that we are at the end of another year. Here at Schneider Estates we have much to be grateful for. Most of all, we are so grateful for you. You allow us to do what we love everyday. From helping younger couples find their first homes to ensuring seasoned investors find good deals and everything inbetween, we are honored to get to work with you and help you to make wise, informed real estate decisions.

 

With that said, there are a few market predictions that we would like to share with you:

 

Santa Cruz will see an Increase in Supply of Housing and Possibly an increase in Density:

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Zillow’s 2017 Market Prediction for California states that “cities will focus on denser development of smaller homes close to public transit and urban centers”. We expect that Santa Cruz will follow a similar trend. With the City and County of Santa Cruz well aware of the fact that housing affordability has become an issue in our town, plans such as the Corridor Rezoning project are moving through our local governments.

Additionally, state and local governing bodies are working together to remove barriers to affordable housing and all eyes are on our state-wide supply shortage. If regulations and restrictions are changed, we can expect an increase in development, however new construction may not begin until well after 2017 given that changing  public policy is not exactly fast. 

 

The Days of Historically Low Mortgage Rates Will Come to and End:

 

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Rates are on the rise. Take a look at the most recent post on mortgage rates from Freddie Mac:

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December 8, 2016

 

The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey. The 30-year mortgage rate rose another 5 basis points to 4.13 percent, starting the month 18 basis points higher than this time last year. As rates continue to climb and the year comes to a close, next week’s FOMC meeting will be the talk of the town with the markets 94 percent certain of a quarter-point-rate hike.
  • 30-year fixed-rate mortgage (FRM) averaged 4.13 percent with an average 0.5 point for the week ending December 8, 2016, up from last week when it averaged 4.08 percent. A year ago at this time, the 30-year FRM averaged 3.95 percent.
  • 15-year FRM this week averaged 3.36 percent with an average 0.5 point, up from last week when it averaged 3.34 percent. A year ago at this time, the 15-year FRM averaged 3.19 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.17 percent this week with an average 0.5 point, up from last week when it averaged 3.15 percent. A year ago, the 5-year ARM averaged 3.03 percent.

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Some possible explanations for this rise include include market volatility, movements in the 10-year treasury rates, and expectations that rates will rise after the upcoming FOMC meeting. So what does this mean for you and your real estate?

As seen above, rates are still relatively low, but Economists at the California Association of Realtors predict that rates this low are not likely to come around again anytime soon. Therefore, if you are thinking of buying, this may be a very good time.

We found a great tool that gives you a rough idea of rates that you can get at different price-ranges (depending on down payment and credit score). Check it out below, and we suggest, revisit it. Keep your eye on interest rates, especially if you know that you and your family will be buying within the next 5 years. As you’ll see from this tool, a small difference in interest rates can make a LARGE difference in how much you pay over the lifetime of the loan.

Click HERE to explore your mortgage-rate options.

If you need help deciding if this is the right time to buy, don’t hesitate to call us. We are here to help you make informed, wise real estate decisions.

 

Nationally, Home values will grow 3-4% in 2017. Here in Santa Cruz we expect home prices to continue to increase more than the national average, but not as rapidly as 2016.

The median home value in the United States is $191,200. Home values have gone up 6.2% over the past year and Zillow predicts they will rise 3.0% within the next year. Here in Santa Cruz we’ve seen very high appreciation rates:

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Looking at the Percentage Change from Year Before of the Median Home Prices, you will see that every City in Santa Cruz County has seen an 8% or higher change in median home price. All but one City has experienced double digit increases in price.

We do believe that Santa Cruz County will have higher appreciation rates than the national average due to an ongoing high demand for housing in the Bay Area, which has trickled into our market, though we expect the percentage increase in home values to be smaller than in 2016. We’ve already seen a slowdown in home value increases month-over-month and, like national projections, predict that this trend will continue.

 

More Millennials will move into the housing market.

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We expect that, slowly, the largest home buying population to date will begin shopping for their first home. We say slowly because this population is also largely burdened with student loan debt and high rents, making obtaining a mortgage and saving for a downpayment more difficult.

However, as this generation moves into their late twenties and thirties, they will start looking for home-buying opportunities. If you are a millennial, know that we provide important information about the home-buying process, low-rate loans, and downpayment assistance programs in our monthly newsletter and have a free home buying guide. In the spirit of giving, we’re providing the guide for free! 

Click HERE for your free homebuyers guide.

If you are a parent/grandparent/loving friend and mentor of a millennial, please share your wisdom, experience, and knowledge about the homebuying process with this younger generation. We strive to educate, empower, and support these young first-time homebuyers, and so if you know someone who we may be able to help, please contact us.

 

References / Further Reading:

Zillow’s 6 predictions for the 2017 housing market under Trump

 

8 experts predict what the 2017 housing market has in store

 

 

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