Home sales, prices will rise sharply next year
A growing number of housing markets are now poised for outstanding growth in 2016, it is predicted by leading economists. A good indication of our growing market was when the Federal Reserve finally raised its prime interest rate on Dec. 16, after years of holding the rate at zero percent.
One report, by the National Association of Realtors, points out specific reasons for their optimistic projections:
“Several markets across the country are poised for substantial growth in home prices and sales in 2016 – likely topping 2006 even, according to realtor.com’s recently released housing forecast. “Growing household formation, a strengthening job market, and low unemployment rates are good signs that can get more millennials, young genXers, and retirees moving.”
The report focuses on 10 markets that are most likely to experience substantial growth next year.
“There are 10 markets that will likely get a lot of attention in the new year, at least if realtor.com’s predictions hold true. Their researchers recently identified the markets they believe will have growth equal to or better than the U.S. average.
“These markets will likely have high demand from home buyers (already having 60 percent more listing page views on realtor.com than the U.S. overall) and quick sales (inventory that sells 16 days faster than the U.S. average).
“Some markets have been hot and are remaining hot (San Diego, Sacramento, Boston, Atlanta),” says Jonathan Smoke, realtor.com’s chief economist.
“Some are just now seeing signs of recovery based on substantially better economic conditions forecasted for next year. Some are spillover markets from very hot markets and most have one or more key demographic driving demand,” the report noted.
Question: Do many homeowners still have a negative equity?
Answer: Yes, but the rate of negative equity is dropping. Here’s the latest report from Zillow:
“The U.S. negative equity rate continued to drop in the third quarter of 2015, according to the Zillow Negative Equity Report. Nationally, 13.4 percent of homeowners owe more on their mortgage than their home is worth, down from 14.4 percent last quarter, and 16.9 percent a year ago.
“Negative equity is one of the most persistent reminders of the housing market crash. Homeowners who owe more on their mortgage than their homes are worth cannot sell, which holds back markets from recovering.” Q: Are mortgages becoming more readily available? A: At this point they are becoming less available. Here’s a late report from the Mortgage Bankers Association:
“Mortgage credit availability decreased in November according to the Mortgage Credit Availability Index (MCAI), a report which analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.”
The report noted that the MCAI decreased 0.8 percent to 127.4 in November. It also pointed out that a decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
“Of the four component indices, the Conventional MCAI saw the greatest tightening (down 2.0 percent) over the month followed by the Conforming MCAI (down 1.0 percent), and the Jumbo MCAI (down 0.8 percent).”
Q: Are there markets today that are in real danger of becoming a real estate bubble?
A: San Francisco’s housing market has grown so unaffordable that some experts say the market is already in a bubble, and it’s not the only market economists are concerned about. Here’s a portion of a recent report:
“A third of the experts surveyed in the latest Zillow Home Price Expectations Survey said the San Francisco housing market is in a bubble, and another 20 percent believe the market is at-risk for bubble conditions within the next year.
“The survey, sponsored quarterly by Zillow and conducted by Pulsenomics LLC, asked more than 100 panelists about their expectations for the housing market. Of those, 66 answered a question about bubble conditions in 20 local housing markets.
“The survey responses revealed that some housing experts are concerned about over-valuation in some of the nation’s hottest housing markets — and that there is significant disagreement among experts about whether the rapid home-value growth in those markets puts consumers at risk.”