The Year in Review
It's really hard to believe that we are almost at the end of another 12 month real estate cycle.
It has certainly been a busy and eventful year in this area and we've seen something of a split personality market.
In the upper 20-30%, there has undeniably been slower activity with sellers outnumbering buyers. Simultaneously, the bottom three quarters of the market has seen the continuation of a very healthy seller's market with low inventory and good numbers of very enthusiastic purchasers.
We moved away from the common situation we saw in 2015 of as many as 20 separate offers for a single home. That being said, multiple offers are still common, but 2016 has been characterized by a generally more cautious approach.
Financial markets have had a turbulent year and that has had mixed blessings for our local real estate markets. At times we've seen confidence eroded, contrasting with the situation we've seen since the election, where stock markets have rallied and, as a direct result of less risk aversion, we've seen mortgage rates in a steady climb.
Much has been written about mortgage rates recently, but we would do well to remember that the current situation was always going to happen, it was simply a matter of when. And while no one is going to welcome higher rates, as I write they are still beneath the expert predictions for where they would end up this year of somewhere between 4.5% and 4.65%.
On any historic scale, home loans are still incredibly cheap and, although we've moved on from the unsustainably low sub 3.5% rates we saw at times earlier in the year, we're still in a much better position than, say, in the very healthy economy of 2006, where 30 year fixed rates averaged 6.41%...
This year has also seen the return of first time buyers, with a lot of millennials finally taking the plunge into home ownership.
Unfortunately, that renaissance has coincided with the ongoing problems of low inventory of available homes for sale. So as good as this year has been in overall terms, it's tempting to think that, with even more choice in the bulk of the market, we might have seen even higher sales.
Overall, however, I think we can be thankful for another year of busy activity. In next week's blog, I will take a look at prospects for the New Year.