- Predictions for the 2016 Housing Market
Predictions for the 2016 Housing Market
- Dec 18, 2015
- New Home Ambassador
- housing market predictions real estate 2016 housing market 2016
Based on a study by Forbes Magazine, in 2016 and 2017, housing construction will increase and home prices will continue to rise. This is a result of more occupied housing which indicates a strengthening market in 2016.
Most economists agree that housing prices and sales will continue to grow in 2016, just at a slower pace. According to a recent report from RealtyTrac, for more than one-third of the nation’s major metro areas, home prices have reached all-time highs in 2015. As mortgage rates increase and home prices wane, sales will grow about half as fast as they did this year and prices will rise at a steadier pace – 3.5% to 4.5%, down from 6% in 2015.
It will be easier for more Americans to qualify for a mortgage in 2016. Lenders are taking steps to find new ways to measure creditworthiness such as evaluating credit scores based on a person’s rental history and utility bill payments. They will also include income from room rentals and family members. A bill was just introduced in the House of Representatives which would allow Freddie Mac and Freddie Mae to consider alternative credit-scoring models.
There will be more first-time home buyers. First-time home buyers will make up a larger part of the market than in 2016 due to the reasons mentioned above… slowing prices and easier ways to qualify for mortgages. This will give millennials the ability to purchase a home in 2016. Lynn Fisher, MBA’s Vice President of Research and Economics, said, “Improving employment markets will build on major demographic trends – including maturing of Baby Boomers, Hispanics and Millennials – to create strong growth in both owner and rental housing markets over the next decade.”
Slower markets mean slower closings. The market is expected to slow next year because government-backed loans will be more common and cash sales will decrease.
The biggest risk to the housing market in 2016 continues to be shortage of inventory. The number of homes for sale was down from 2014 to 2015 in 45 of the 60 metro tracked by Redfin. Inventory across all 60 metros is down 4 percent from a year ago. In the most recent pending home sale report from NAR, sales have plateaued due to a shortage of homes and fast rising prices in some markets.