Buying a house in 2017 will feel kind of like you’ve jumped onto the subway just as the doors were closing. Your heart’s pounding and you’re winded from the race, but you made it—just in time.
OK, so maybe that’s a little exaggerated. But here’s the thing: Interest rates have begun to rise and will likely climb higher. Inventory is low and could shrink more. And home prices? Well, home prices are increasing—and they’re not predicted to fall any time soon.
If you don’t jump aboard the real estate train now, you might be too late.
“It’s tough to buy a home today in most places in the country because there are so few homes for sale,” says Jonathan Smoke, chief economist for realtor.com®. “But if you wait to buy, then you’re gambling that the market will be better for you to purchase in the future.”
So finish reading this, then start looking for a house. Here’s why.
1. Rates are risingIn 1981, when mortgage rates hit 18% and seemed to rise every day, single-digit rates seemed like an impossible dream.
Last August, however, rates on 30-year mortgages bottomed out at 3.55%. Now that the Federal Reserve finally decided to raise its key interest rate, mortgage rates have been climbing slowly. Today, the average rate is just above 4%; by 2019 or 2020, rates could easily climb to 6%.
“All signs point to this trend continuing,” says Richard DeNapoli, managing director for Coral Gables Trust and a former Florida real estate commissioner.
Before you freak out, take heart: Rising rates aren’t necessarily a deal breaker for buyers. The National Association of Realtors® calculated that a rise from 4.2% to 5% would increase average monthly mortgage payments by $90—not nothing, but not a catastrophe, either. And if you take the long view, those higher rates are still historically low.
“For buyers there still is opportunity,” says Danielle Hale, managing director of housing research for the NAR. “For those who are still able to get into the market, these low rates continue to be helpful.”
2. Inventory is shrinkingIn November 2016, there were only 1.85 million homes for sale. That’s a nearly 10% drop from the year before. And it continues a trend of steady decline since just before the housing crash, when inventory peaked.
Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year.
Or even next month. If you get moving now (during the winter, which is largely considered to be real estate’s off-season), you’ll have less competition for those homes than you will in the peak spring and summer months.
Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.
“If you think it’s bad right now, wait until April to August,” Smoke says.
3. Home prices are still risingThe bad news for buyers is that home prices now stand higher than before the 2007 crash, increasing 5% from 2015 to 2016. And housing experts expect an additional 2% to 3% jump in 2017, DeNapoli says.
“Prices continue to go up; we have yet to see that ceiling,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles. “I think they have room to grow.”
How high prices will rise and how long they’ll remain high is anyone’s guess. Rising mortgage rates and the new Trump administration have introduced “uncertainty” into the real estate market, Levin says.
“And uncertainty is never ideal,” he says.
The good news? If you jump into the market pronto, you just might make it before those doors close.

Until recently, the mortgage interest deduction was right up there with Social Security as a sacrosanct institution on Capitol Hill, protected by lawmakers on both sides of the aisle.
Backed by the powerful National Association of Realtors and supported broadly by middle-class homeowners, previous efforts to dismantle the mortgage deduction have gone nowhere.
However, the Better Way tax-reform “blueprint” from Republican House Speaker Paul Ryan would essentially get rid of the mortgage interest deduction, without policymakers having to vote to eliminate it.
The plan would make the standard deduction far more valuable -- increasing it from $12,600 to $24,000 for a married couple. This would result in far fewer people itemizing their taxes, which is necessary in order to claim the mortgage tax deduction. (President-elect Donald Trump’s tax plan calls for raising the deduction even higher, to $30,000 for joint filers.)
Under the House Republicans’ plan, an estimated 38 million of the 45 million filers (or 84 percent) who currently itemize would opt instead for the standard deduction, according to an analysis by the Tax Policy Center. The GOP proposal states that “far fewer taxpayers will choose to itemize deductions, with the vast majority of taxpayers finding they are better off by taking advantage of the larger, simpler standard deduction instead.”
Under current rules, taxpayers can itemize and deduct the interest paid on up to $1 million on a mortgage, and home equity debt of up to $100,000. The mortgage interest deduction is the third-most expensive subsidy in the tax code, costing the federal government about $70 billion per year, according to the Tax Foundation.
Even with Republican control of the House, Senate and the White House, the Republican tax plan is nowhere near a done deal. Nearly three-quarters of Americans recently polled by the National Association of Home Builders say that they support the government providing tax incentives that encourage homeownership, and lobbyists for the real estate and construction industries are already gearing up to fight the provision.
If the blueprint were to become law, it would have ramifications for millions of taxpayers, homeowners and sellers, but the overall impact on the housing market (and your wallet) may be smaller than you think. Here’s what you need to know:
1. Home values could fall in the short-term. The total elimination of the mortgage interest deduction might push prices down around 7 percent, according a recent paper from the Federal Reserve. The impact might be smaller if the deduction is not fully repealed. That’s a relatively small decrease compared to the double-digit decline seen after the housing bubble burst in 2006, but it would mean a paper loss of nearly $17,000 on the average $240,000 home. Still, the impact of increasing the standard deduction, rather than eliminating the mortgage-interest deduction, would likely have a smaller impact.
2. But only a small portion of taxpayers uses the mortgage-interest deduction. While it enjoys broad support, the vast majority of homeowners don’t benefit from the mortgage interest deduction as it currently stands. The benefit is only available to those who have a mortgage on their home and who itemize their taxes.
Only about 20 percent of taxpayers currently claim the deduction, and it has an average benefit of just over $2,000, according to the Tax Policy Center. “You go to [mid-tier markets] like Texas, Florida, and Arizona, and no one talks about buying a home to save on taxes,” says John Burns of John Burns Real Estate Consulting, which provides data and advice to real estate investor. “It’s not even part of the equation anymore.”
3. Most consumers would still be better off buying. It’s cheaper to buy than to rent a home in most parts of the country, and that wouldn’t change with the elimination of the mortgage deduction. “This doesn’t fundamentally affect the rent-versus-buy decision,” says Trulia Chief Economist Ralph McLoughlin. “It makes it less of a better deal to buy than to rent, but buying still remains a good financial option if a household can stay in their home for seven years.”
 calculation by Politico finds that a homeowner with a $65,000 annual salary would see the tax benefits of buying a $263,000 condo plummet from $3,325 a year to $166. Tying up your assets and losing the ability to easily relocate may not be worth that much, although there are other benefits of homeownership, such as growing equity and protection from rising rents, and there are many emotional incentives that compel people to become home owners.
4. Middle-income homeowners would feel the biggest bite. Any impact on home prices would likely be concentrated on more moderately priced homes, where the owners aren’t paying enough in interest to outweigh taking the new deduction but aren’t in a high enough tax bracket to get a huge break. The Tax Policy Center estimates that middle-income taxpayers would see an average tax cut of only $260 per year under the Republican plan. That’s hardly enough to offset even a modest loss in home equity, although long-term demand would likely see prices bounce back over time.
5. High-income homeowners would benefit. The wealthiest homeowners would benefit from both the tax cut and continued access to the mortgage-interest deduction, since they’d likely continue to itemize. Those making more than $1 million a year typically save nearly $9,000 thanks to the deduction. Under the Republic tax plan, the top quintile of taxpayers would also receive an average tax cut of $11,000 a year.
Due to larger mortgages and a higher tax rate, wealthy borrowers already benefit disproportionately from the mortgage interest deductions, which wouldn’t change. Wealthy taxpayers often choose to finance the purchase of a home even though they could pay cash, as part of a broader tax planning strategy.