If you’re ready to purchase a new home, what are some of the housing market trends to consider for 2016? While some trends don’t gain much traction, there are several important ones to keep an eye on that could become the norm. 2016 will offer some interesting changes in the housing market, so it’s important that you keep up with everything that is happening in the industry before you plan on purchasing your home.
2016 Housing Market Trends
Mortgage Rates May Rise
Freddie Mac economists expect the mortgage rates to rise from the end of 2015 into 2016. This really depends on what the Federal Reserve plans on doing with interest rates, but it has caused volatility in a lot of markets. In May, the average rate for a 30-year fixed mortgage was just under 4%. That could quickly change depending on what the Fed decides. Rates could climb as high as 5%, so be prepared for the increase if you plan on purchasing a house in 2016.
More Difficult to Borrow
If borrowing costs are raised, there is going to be less and less homeowners who are going to be able to refinance successfully. This will affect current homeowners more than those looking to purchase a home. What this means is that attracting homeowners through purchase loans will receive a bigger marketing push than refinance loans.
Rent on the Rise
One of the housing market trends of 2016 will be a hefty rent rate. Renters can pay as much as 30.2 percent of their income on rental payments, which is the most United States residents have ever paid. That trend isn’t likely to go away. When people are looking at their finances, it may make more sense to purchase a home than to rent. This could create a bigger demand for housing, even with interest rates higher.
Housing Market Overpriced
Some analysts think that the current housing market is overpriced, which could turn into a common theme for housing market trends in 2016. With refinancing options more difficult to receive and the value of houses potentially dropping, homeowners want to sell could stay in their current homes longer than expected. This could also help first time homebuyers find more affordable options from owners desperate to sell.
Colony Title has been in business since 1995 and handles more than 2,000 real estate closings per year. If you have any questions or would like to speak to a representative about closing, please give us a call at 410-884-1160 or visit our website for more information.