Predictions for 2017

I am often asked, “What will the market do this coming year?” My reply is that “I don’t have a crystal ball to make that type of prediction.” Then I always tell them what I really think. I guess the crystal ball comment is to hedge my bet in case I’m wrong!

There is recent data that shows where we have been, which in turn shows the trend and direction we are heading. Using that kind of data is sort of like predicting the weather. The weather man is usually right, but not always! It is a no-brainer to say that summer will be warmer than the winter and that it will cool off in the fall. That is a normal seasonal cycle in our region.

Will our general market improve or are we due for another down cycle? Many people think that the Presidential Election has had a lot to do with our economy and I think those people are probably right to a degree. But, the election is over and whether or not you agree with the outcome, consumer confidence seems to be up. Maybe that is just because the waiting and wondering is over. The rebounding stock market may be a strong indicator that most consumers are confident about the economic future of our country.

Here are some facts for the Spokane area: Compared to the year 2010, the number of residential sales has doubled. Residential sales for 2016, compared to sales in 2015, are up by almost 10%, (except for sales in July of this year which were lower than last year in the same month). Distressed sales (repo’s) are down by about 8% and inventories were down about 25% in November compared to last year at the same time. The average sales price is up by over 7% from last year. I interpret these statistics to say that the market is improving and this growth trend should continue for several years.

Folks constantly make comments “that rising interest rates will inevitably stall the real estate market.” Not only is that statement historically unfounded, but it is more complicated than that. Jed Kolko, Chief Eonomist at Trulia, says that, “recent history reveals how today’s rising rates may be more bark than bite. Typically, spiking mortgage rates take a big chomp out of refinancing immediately and smaller nibbles out of sales three months later. Longer term, the impact of rising rates is typically offset by stronger economic growth.”

Jim Palmer, Jr.
509-953-1666
www.JimPalmerJr.com

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