By Jaymi Naciri for RealtyTimes.com:
The Fed raised interest rates last week, causing a ripple of concern among those who are worried about the effects on higher mortgage rates and the greater impact on the real estate market. But what do rising rates really mean for homebuyers? We've taken the temperature of several housing experts to get their take on the homebuying landscape for 2017.
Rates will continue to rise... or will they?
"When the rate was raised last week, the Fed predicted it would raise rates three more times in 2017, up from two in its previous forecast. But those predicted increases are just that - predictions, said the Berkshire Eagle. "A year ago, the Fed projected that it would raise rates four times in 2016 but has ended up doing so just once."
Many housing authorities expect that rates will, indeed rise, and are eyeing a 5% benchmark.
"My forecast is for the 30-year fixed rate to rise above 4.5 percent by year's end, and worst case scenario, knock on the door of 5 percent," Matthew Gardner, chief economist at Windermere, told Inman.
Rising rates will impact homeownership…or will they?
Realtor.com predicts that home prices will continue to rise next year, increasing 3.9 percent. Their estimation of how high mortgage rates will go: 4.5 percent. Will the combination of rising prices and rates kill housing market momentum? The Mortgage Reports doesn't think so.
The good news of rising rates, they said, is that "home price increases could finally slow. Home shoppers may once again find ‘deals' in the 2017 market. Home values have been catapulted upward by almost-free borrowing. Home buyers were getting 30-year fixed rates in the low 3s, and fifteen year rates solidly in the 2s. That's lower than the rate of inflation is likely to be in coming years.