I find it important to share articles I come across to educate my clients and readers. I often write my own blog entry – but find sharing information much more powerful than standing on a soap box. Enjoy this article from Redfin found on Housingwire. ENJOY! – Sabrina I’ve added my 2 cents in bold italics.
Here’s why 2016 will bring good news for potential homebuyers
Next year isn’t predicted to bring any giant hoopla to set off the market. However, moderate growth is more sustainable, and better for buyers.
According to Redfin’s forecast for 2016, “Most economists agree that housing prices and sales will continue to grow in 2016, just at a slower pace. Call it a slowdown, but not bad news.”
The New Year doesn’t bring all good news, with some bad tossed in the mixed. Overall, Redfin said, “All things considered, we see a fairly uneventful housing market next year.”
Here are Redfin’s five housing market predictions for 2016:
- Prices and sales will grow half as fast
As price growth ebbs and mortgage rates rise, more homeowners will stay put. Sales will grow about half as fast as they did this year and prices will rise at a more normal 3.5% to 4.5%, down from almost 6% this year.
According to a recent report from RealtyTrac, for more than a third of the nation’s major metro areas, home prices have reached all-time highs in 2015.
Here on the SF Peninsula housing demand is very high with so much job growth and inventory is very low. I expect more of the same in 2016.
- Easier Credit
Americans for whom a mortgage has been just out of reach will have a better shot at qualifying for one in 2016.
Lenders will embrace new ways to measure creditworthiness and mortgages will evolve to serve a changing American household. For example, credit scores will better evaluate a person’s rental history and utility bill payments. More loans will allow buyers to include income from room rentals, live-in parents and extended-family members.
In a significant move for housing regulation, last week a bill was introduced in the House of Representatives that would allow Fannie Mae and Freddie Mac to consider alternative credit-scoring models beyond the FICO credit score the government-sponsored enterprises currently use when determining what loans to purchase.
Yes, since the housing crash years back, lending as improved. That doesn’t mean it is easy – it is tedious to say the least. But it is for the overall well being of our market. If you are thinking about buying a home – please get a full pre-approval completed with your lender of choice. Understand your budget and adjust your wants/needs list accordingly.
- More (and older) first-time buyers
We expect first-timers to make up a bigger portion of the market than they did this year. The reason is simple: The market will be more welcoming to them thanks to the aforementioned slowing price growth and easier access to loans. This year’s market dropouts have saved for bigger down payments and will be ready to give the market another shot early next year. And more of those millennials who had been holding off on buying for various reasons will finally be ready and able to in 2016.
In the Mortgage Bankers Association’s housing report that looks at the future decade, 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.”
Oh yes, as those effected by the crash heal their credit and save their money – there will be a new influx of buyer coming into the market – again for the very first time. We will also see millennial buyers investing in real estate.
- Slower market, slowing closings
The 2015 housing market was the fastest we’ve seen at Redfin. From January to October, the typical home was on the market for 36 days, four days faster than the same period in 2014. We expect the market to slow in 2016 as government-backed loans become more common and cash sales become less so. Because of low inventory, bidding wars will still be in force next year, but there will be a lower ceiling on price escalation as 2016 buyers won’t be willing or able to go as high as buyers have in recent years.
To help, here are a few tips from Minnesota Realtor Craig Kamman to help win a bidding war. On example he listed is to offer full price or more. Money is a major factor in a seller’s decision, but not the only one.
I also feel the changes in lending, that went into effect in October of 2015 – will slow down the pace of the market a tad. Though we do see many all cash buyers on the SF peninsula who will not be tied to loan regulations. That doesn’t mean cash is supreme king – but it does mean buyers with loans will have to set themselves apart. The Caton Team as a tool box of tactics we use to help our buyers.
- Continuing inventory shortage
The biggest risk to the 2016 market will be the continuation of inventory shortage, especially in the affordable segment of the market. The number of homes for sale shrank 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.
The most recent pending home sales report from the National Association of Realtors said that sales have plateaued this fall as buyers struggle to overcome a scant number of available homes for sale and prices that are rising too fast in some markets.
The SF Peninsula has limited land. I have already seen many homeowners add onto their existing homes instead of jumping into the buyer pool Which also effects our inventory.
My advice – if you want to be a SF Peninsula owner – do not give up so easy. Each home on the market is a unique opportunity and should be treated as such. It is a journey – not a race. Call or click The Caton Team to learn more about buying and owning property in Silicon Valley.
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Thanks for reading – Sabrina
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