U.S. Housing Market Update

The 30-year fixed mortgage rate rose from 3.5 percent to 4.25 percent after the presidential election. While higher rates might deter potential homebuyers — particularly young first-timers — residential real estate is expected to continue being a seller’s market throughout 2017.1

Meanwhile, the fate of Fannie Mae and Freddie Mac remains unclear. These government-sponsored enterprises have been managed by a federal agency since the housing slump in 2008. Trump’s pick for Treasury secretary, Steven Mnuchin, has indicated that his top priority is to privatize these mortgage giants.2

The real estate market bodes particularly well for retirees who have paid off their mortgage. While many retirees prefer to stay put in their longtime homes, it may be worth considering downsizing to a smaller place that is easier to maintain. Today’s market provides a wide range of potential homebuyers willing to pay top dollar for homes in areas with low inventory.3

Many retirees looking to downsize are in the same boat as other homebuyers: Plenty of motivation but not enough options from which to choose. In this situation, many are considering new construction, including the lower-cost “tiny house” trend.4

Those in the market for a new home can even custom build a smaller home designed to make life easier as they age, featuring no stairs, wide hallways, easily accessed storage areas and some of the new smart-home technological conveniences to help them stay in touch with loved ones.5

For those who haven’t retired, or aren’t prepared to downsize just yet, one possibility may be purchasing a smaller home now and using it for rental income until they’re ready.6

Be sure to consult with a professional real estate agent or broker to help decide what’s best for your unique situation.

Content prepared by Kara Stefan Communications

1 Diana Olick. CNBC. Dec. 13, 2016. “How rising mortgage rates may not matter for housing.” http://www.cnbc.com/2016/12/13/how-rising-rates-may-not-matter-for-housing.html. Accessed Feb. 8, 2017.

2 Holden Lewis. Bankrate.com. 2017. “What’s in store for housing market in 2017?” http://www.bankrate.com/finance/mortgages/housing-trends-1.aspx. Accessed Jan. 24, 2017.

3 Yuqing Pan. Realtor.com. Jan. 16, 2017. “Sold Out: These 10 U.S. Cities Have the Biggest Housing Shortages.” http://www.realtor.com/news/trends/top-10-housing-markets-constrained-by-tight-inventory/. Accessed Jan. 24, 2017.

4 Kiplinger. 2017. “10 Great Tiny Homes for Retirees.” http://www.kiplinger.com/slideshow/retirement/T010-S001-great-tiny-homes-for-retirees/index.html. Accessed Jan. 24, 2017.

5 TD Bank. Realtor.com. Sept. 18, 2015. “Is New Construction for You?” http://www.realtor.com/advice/buy/is-new-construction-for-you/. Accessed Jan. 24, 2017.

6 Bankrate. Aug. 2, 2016. “Funding retirement with rental income.” http://www.bankrate.com/finance/retirement/funding-retirement-with-rental-income-1.aspx. Accessed Feb. 22, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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