What 2016 Looks like for Real Estate

January 4th, 2016 | by: Steve Pollack | Posted in : Real Estate News, Real Estate Tips

In the past year a few trends have fizzled out and a few more have started to gain momentum. We have compiled this list of what’s to come to the Real Estate market this New Year.           

“It’s that time of year again, when the Home Buying Institute rounds up a collection of insightful — and sometimes controversial — predictions for the U.S. residential real estate market. We begin with home prices and we end with Millennials, with a sprinkling of mortgage rates and employment trends in between. Supply and demand imbalances could continue to drive prices north, while job gains could bring more buyers into the market. Here are five key predictions for the U.S. housing market in 2016:”

1. Home prices will rise more slowly 2016: In 2015 we saw a lot of buyers and not enough inventory to satisfy the market. This meant higher prices for homes and cutting out a portion of new buyers. Because of new jobs being made in the U.S. there will be more qualified buyers this next year – meaning more demand and not enough supply. Luckily because of a correction in the market and high interest rates, it will slow the rate at which home prices rise.
2. Biggest home-price gains will continue in the west and areas where there is job growth: “In 2015, some of the biggest home-price gains occurred in the western half of the nation. Cities like Denver, Colorado and many in California experienced double-digit gains in property values. Denver and San Francisco, for example, both posted year-over-year gains above 10%. These markets could experience some cooling in 2016, as mentioned above. But many housing analysts expect that the biggest home-price gains will continue to occur in these western markets.”
3. Mortgage rates will rise in 2016: Due to the strengthening of the U.S. economy, interest rates will rise and continue to rise throughout 2016. Luckily they will rise slowly from 3% to about 5%, which is still very attractive considering past rates.
4. “Job gains will bring more home buyers into the market: In 2014, the U.S. gained about three million jobs. This year, we are on track to add another two million, according to Doug Duncan, chief economist at Freddie Mac. During September alone, the country gained another 200,000 jobs, according to the payroll company ADP. This means there are more people in a position to buy a home. So we could start 2016 with a lot of housing demand. On top of that, many cities across the country are still suffering from a shortage of homes for sale (relative to demand). This supply-and-demand imbalance could continue to push home prices north in 2016, as buyers compete for limited inventory.
5. Student loan debt will keep many Millennials out of the market: According to a recent analysis by the Federal Reserve, outstanding student loan debt now totals more than $1 trillion. That’s a one followed by 12 zeros. That’s a lot of debt. And it’s keeping many would-be home buyers from entering the market. We expect this trend to continue into 2016. Student loan debt can create additional hurdles for mortgage shoppers, and in a couple of ways. For one thing, it increases the borrower’s total debt-to-income ratio, which can cause problems during the underwriting and approval process. Additionally, excessive debt can lower a person’s credit score, especially when he or she has missed a few payments in the past. All of this makes it harder for debt-burdened Millennials to qualify for home loans.”
   
   Read more: http://www.homebuyinginstitute.com/news/fresh-batch-housing-predictions-679/#ixzz3vfzMhi8L
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