As we start a new year, there is no shortage of predictions with regard to the real estate markets. Here is where the experts have weighed in:
Realtor.com®: Home sales are poised to zoom to the highest levels since 2006 next year, according to a 2016 housing forecast issued by realtor.com®. Gains in new-home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new-home construction market is expected to see the most gains in 2016, with realtor.com® forecasting a 12 percent year-over-year increase in housing starts and a 16 percent year-over-year growth in new home sales.
Fannie Mae: “We see consumer spending as the biggest driver of growth moving into 2016,” said Fannie Mae Chief Economist Doug Duncan. “An uptick in average hourly earnings and low unemployment numbers are contributing to a positive outlook for consumer spending. The supply of existing homes remains lean, putting significant upward pressure on home prices. Meanwhile, we expect interest rates to rise only gradually through next year, and an improving income trend should help support affordability.”
Redfin: Housing projections for next year include slowing price increases and sales growth, easier credit, more first time homebuyers and continued inventory shortages. Redfin sees home prices increasing in the 3.5 percent to 4.5 percent range next year.
It looks like the consensus is for moderate real estate growth and moderate interest rate increases, with new home construction and first time buyers leading the way.
The Markets. Rates on home loans were little changed this past week. Freddie Mac announced that for the week ending December 24, 30-year fixed rates fell one tick to 3.96% from 3.97% the week before. The average for 15-year loans was unchanged at 3.22%. Adjustables were up slightly, with the average for one-year adjustables increasing one tick to 2.68% and five-year adjustables rising to 3.06%. A year ago, 30-year fixed rates were at 3.83%, a bit lower than today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac –“Treasury yields dropped slightly as the holidays approached. Rates on home loans remained largely unchanged, with the 30-year fixed rate ticking down a basis point to 3.96 percent. As we mentioned last week, long-term interest rates will not spike in response to the Federal funds rate increase. While we expect the 30-year rate to be above 4 percent in early 2016, we anticipate rates will gradually increase, averaging 4.4 percent for the year.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Updated December 24, 2015
|Daily Value||Monthly Value|
|6-month Treasury Security||0.47%||0.33%|
|1-year Treasury Security||0.65%||0.48%|
|3-year Treasury Security||1.32%||1.20%|
|5-year Treasury Security||1.74%||1.67%|
|10-year Treasury Security||2.27%||2.26%|
|12-month LIBOR||0.868% (Nov)|
|12-month MTA||0.285% (Nov)|
|11th District Cost of Funds||0.649% (Oct)|
|Prime Rate||3.50% (Dec)|
Do signs point to another housing boom? Perhaps — home sales are poised to zoom to the highest levels since 2006 next year, according to a 2016 housing forecast issued by realtor.com®. Gains in new-home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new-home construction market is expected to see the most gains in 2016, with realtor.com® forecasting a 12 percent year-over-year increase in housing starts and a 16 percent year-over-year growth in new home sales. The gains in existing-home sales are expected to be more moderate, with expectations of a 3 percent year-over-year gain. “Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market,” says Jonathan Smoke, realtor.com®’s chief economist. “The improvements we’ve seen over the last few years have enabled a recovery in the existing-home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market.” Next year, total sales for existing and new homes are expected to reach 6 million for the first time since 2006. Source: Realtor.com
As China’s economy slows and its stock market posts sharp declines, Chinese investors are reportedly looking to park their money in U.S. real estate. Developers, financial institutions, and high net-worth individuals are seeking “safe investments in income-producing commercial and residential investments rather than luxurious real estate purchases for personal use,” says Edward Mermelstein, an international real estate attorney. Since August — when the Shanghai Stock Exchange took an 8 percent dive — Mermelstein says there has been a “positive and consistent interest” from Chinese investors in U.S. properties. “This is very much a flight to safety,” he says. Chinese investors are showing a heightened interest in land, office, hotel, retail, and mixed-use properties in the U.S. Chinese investors already account for nearly 28 percent of the total $104 billion in residential U.S. real estate sold to foreign buyers last year, according to the National Association of Realtors®.Source: The Street.com
According to a new report from John Burns Real Estate Consulting, home buyers who are looking for large discounts should keep driving and look beyond urban cores. “In my 26 years in the business, the price discount available to someone who is willing to commute has never been greater,” John Burns says. Suburbs have traditionally been a lure to families with children. But changing demographics and social behavior have been countering that trend lately. Younger generations are not as willing to commute. In a look at the driving habits of those ages 20 to 24, the report found that just 78 percent have a driver’s license compared to 93 percent in the late 1970s. Source: CNBC