Usually, I’m surprised to look at my calendar each January and find that suddenly, and apparently without my permission, time has continued to roll forward. However, this year I am determined to think more about the year ahead, rather than dwelling on what’s already behind me. As such, now is a perfect time to consider some key real estate trends, and especially some important mortgage trends, to look out for in 2016. Whether you’re preparing to buy your first home, or you’re on the cusp of selling a reliable and beloved property, you’ll want to check out the exciting forecasts below.
Buying is Better than Renting
First, let’s talk finances: if you’re a renter, then you’re in for some bad news, because rents are currently becoming more expensive and less affordable. In fact, according to The National Real Estate Post, rents are rising at about 4 percent per year. As such, it’s hardly surprising that more and more renters are having trouble finding rates that don’t exceed the recommended 30 percent of their monthly budget.
Conversely, buying a home is more affordable. While mortgage rates may have risen slightly, expect them to remain relatively low. Many experts forecast four more interest rate hikes of about .25 percentage points during 2016, but there is some dissension on the plausibility of this occurrence. Some experts believe the Fed will, in fact, raise interest rates four times, while others assert it’s looking increasingly likely that the Fed will not be raising rates as much this year as it originally predicted. That said, even if there are more interest increases on the horizon, you can still expect relatively low 30-year fixed-rate mortgages. According to Freddie Mac, the average 30-year fixed-rate mortgage for 2015 was about 3.85 percent. Additionally, the Huffington Post predicts that 30-year fixed-rate mortgages will probably be at about 4.5 percent at the end of 2016. To put this number in perspective, consider that Freddie Mac reports that the average rates for 2000 were about 8 percent.
In short, while interest and mortgage rates will likely increase this year, the increases are not likely to be dramatic and mortgage rates will probably stay relatively low. Low rates are a good sign for those looking to secure a fixed-rate mortgage, as these mortgages won’t change in the future and can ensure reasonable payments for many years to come. As such, capitalizing on 2016’s low rates is a smart move, especially since there’s a good chance mortgage rates will begin to rise in coming years, according to the New York Times. Better secure those competitive rates while you still can.
Millennials will Make their Move
Again, this trend might surprise some people, especially those of you who have staunchly asserted that “those darn kids can’t take care of themselves.” However, instead of fulfilling this expectation for irresponsibility, it seems that millennials are reaching a level of stability that will enable them to start buying houses in larger numbers. This is not to say that thousands of millennials will suddenly descend upon the housing market like a swarm of locusts; rather, it is simply likely that more and more millennials will choose to settle down and buy a house in the coming years. After all, last year saw the youngsters account for about two million total sales, and there’s no reason to expect this trend to suddenly change.
That said, millennials are not the only generation that can look forward to buying. Older generations, such as baby boomers, are generally retiring, while members of generation X are earning more reliable incomes. As such, older generations will be looking to relocate, either to smaller and more manageable locations for retirement, or to more comfortable neighborhoods better suited for family life. In any case, whether you’re a young upstart looking to purchase your first home, a family searching for the perfect place to settle down, or a retiree yearning for peace and quiet, 2016 is shaping up to be a promising year for your housing needs.
Expect Things to Settle Down
The housing market will most likely continue to see some growth in 2016, but expect the rate of this growth to be slower than in 2015. Don’t make the mistake of seeing this trend as a problem, however; rather, see it as a mark of a more healthy housing market. Indeed, though the state of the housing industry is not perfect, and though some obstacles will no doubt present themselves in due time, many experts remain optimistic when looking ahead to 2016.
All in all, both buyers and sellers should approach 2016 with confidence. For help capitalizing on these trends today, contact Pickett Street at email@example.com, or contact Cody Touchette, MLO # 83216, Pickett Street’s preferred lender.