The mid-March Federal Reserve decision to increase short-term interest rates has rippled through the rest of the global market. With many outlets reporting that this first rise will just be one of three for the 2017 fiscal year, it seems as though this is only the beginning of an uptick in global economy.
“Rising inflation will predominately dictate the next monetary policy decision, but another short-term rate hike should be expected by the end of the summer. Right now, rents and housing costs are increasing faster than other components because of the stubborn housing shortages in much of the U.S. To contain inflation and slow the pace of future rate hikes, more home construction is needed now.” That definitive statement by National Association of Realtors Chief Economist Lawrence Yun seems particularly apt for the Seattle and Bellevue markets, especially.
Fortunately for buyers, there are already reports stating single family home construction is on the rise. U.S. home building was already improving in February and was up 6.2% compared to February 2016. The National Association of Home Builders just published a press release stating “builder confidence in the market for newly-built single-family homes jumped [to]… the highest reading since June 2005.” Additionally, here in the western region of the U.S. production rose 35.7% in February. Hopefully, this means the housing shortage will soon even out.
So, what does this mean for overseas markets? Investors in Asia Pacific commercial real estate were expecting the rise in rates, but nonetheless are expecting the “main transmission mechanism of the Fed rate increase should be via the RMB exchange rate against the USD.” World Property Journal had already reported in December that Hong Kong residential prices were expected to rise 5% in 2017. A statistic the Seattle area is benefiting from, considering Chinese buyers are becoming more and more interested in our real estate market.
These trends certainly are worth keeping an eye on and, more so, worth researching for yourself if you’re currently looking to buy. Lock in your mortgage rate now before the next potential rate hike and please don’t hesitate to contact me for any and all real estate needs you may have.