U.S. hous­ing mar­ket ex­pan­sion ex­pected to con­tinue in 2016

Financial Mirror (Cyprus) - - FRONT PAGE -

Hous­ing prices in the U.S. have risen by around 6% over the past 12 months and, bar­ring any ma­jor eco­nomic down­turn, de­mand for hous­ing should sup­port ad­di­tional growth in home prices next year. Re­searchers at CoreLogic have noted five fac­tors that will af­fect the hous­ing mar­ket in 2016, based on as­sumed over­all eco­nomic growth of 2% to 3% in the United States.

First is an ex­pected in­crease in the Fed­eral Re­serve’s pol­icy rate of around 1% be­tween now and the end of 2016. That will af­fect ad­justable-rate mort­gage hold­ers and cost new fixed-rate mort­gage bor­row­ers an ad­di­tional half a per­cent­age point, push­ing mort­gage in­ter­est rates to around 4.5% by the end of 2016.

Sec­ond, more than 1.25 mln new house­holds are pro­jected to be formed in 2016, most of which will be seek­ing rental homes.

Third is con­tin­ued strong de­mand for rental hous­ing. CoreLogic expects rental va­cancy rates to re­main low and rent pay­ments to rise faster than in­fla­tion.

Fourth, the owner-oc­cu­pied hous­ing mar­ket should see a rise in both sales and prices. Pur­chase de­mand may lead to the best sales year since 2007, and home prices could ap­pre­ci­ate in a range of 4% to 5% dur­ing the year.

Fifth, mort­gage orig­i­na­tions for sin­gle-fam­ily homes are likely to de­cline by 10% in 2016, while new loans for mul­ti­fam­ily prop­er­ties are likely to rise. Over­all, CoreLogic projects that to­tal loan orig­i­na­tions will rise by 10% to 12% and that home eq­uity lend­ing will also in­crease. Re­fi­nanc­ings, how­ever, could drop by a third. (Source: 24/7 Wall St.com)

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