We look forward to 2016 by looking back at 2015. And in the case of housing forecasts, we typically look back to 2007 for a benchmark view.
2015 housing sales were the highest over the past 9 years. Steady job growth and low interest mortgages helped to maintain a flow of home buyers into the market and for prices to climb. 5.26 million homes were purchased in 2015, a 6.5 percent increase over 2014. At the market’s peak in 2005, sales were at 7.08 million homes, but we shouldn’t expect to return to such a heated volume. The median sales price rose 6.8 percent in 2015. Average hourly earnings are still relatively tepid but are improved by 2.5 percent from 2014.
So, as a result some projections for 2016 feel solid. The optimism factors in the economic engine starts and stalls that were experienced in 2015. There is a weakness we are still working our way through. It is expected to continue and a recession is spoken of as a real possibility now. Previous hints about one have changed to actually expecting it. Inventory is expected to remain tight. Lawrence Yun, National Association of REALTORS economist, forecasts continuing job growth in 2016. His forecast of 2.7 million jobs would exceed 2015 numbers of 2.5 million created jobs.
What else looks good?
- Gains in housing values should continue,
- Negative equities should continue to fade. At its worst 17 million homeowners were underwater. By the end of 2016 the number of homeowners experiencing negative equity should be reduced to about 5 million,
- Mortgage rates should continue to be low and credit guidelines will be easier. Buyers wishing to make home purchases with FHA loans will find friendlier terms because the agency cut its fees last year and there is talk of cutting more soon,
Rents will continue to rise in most parts of the country as demand continues to outstrip supply. This will be a difficult situation for those would-be buyers trying to save money toward the costs of a home purchase.
In addition to the easing of costs in the use of FHA loans for mortgage financing, some lending institutions are coming out with conventional programs that have easier terms and qualifying conditions. These programs may be worth checking out.
If you are interested in making a move this year, it is a good time to do it. There is no obligation to sell when you obtain a market value evaluation on your home. Nor is there an obligation to buy when you find out what your mortgage qualifications are and investigate houses for sale in your stated areas of preference.
For professional real estate service in Maryland counties of Frederick, Carroll, Washington and Montgomery, call Grace Borell, REALTOR with Long & Foster Real Estate office in Frederick, Maryland. Providing serve that seeks to exceed expectations for 19 years.