As the end of 2015 looms near, there are a couple things you can be sure to find on the internet, and I’m not talking about cyber deals for holiday shopping. I’m talking about lists. The end of the year brings with it countdowns that look back at virtually everything that occurred over the past year, including top movies, top celebrity meltdowns, top trends in social media, etc. There is another type of list you’ll see; however, that instead of looking back at the year that is ending, predicts what is to come in the next year.
In the world of mortgage lending and real estate, most decisions are made based on some sort of educated guess or hope about the future, so there are plenty of lists compiled and posted about what is to come over the next year. CoreLogic, a financial analytics and data insights compiler, Trulia, a homebuyer’s resource and MLS database tool, and individual housing expert and author, Lynn Effinger, have each recently released lists of predictions for the housing market in 2016. While each list is different, they definitely have common threads, which, when analyzed together could give a pretty good picture of what is going to happen in 2016.
It’s not surprising that each of these three lists predicts that interest rates on mortgages are going to increase in the year to come. You don’t have to have a crystal ball or a degree in economics to know this is a likelihood–mortgage rates reached historic lows during 2015, and there is really nowhere for them to go but up–but each of these experts has a slightly different take on them. CoreLogic’s prediction is that rates will rise up to a half a point by this time next year, while Effinger’s prediction is slightly more pessimistic, putting the increase at one percent. Trulia’s prediction about interest rates focuses less on the actual amount of increase, and more on the psychological effect on potential buyers. Their data, based on a survey by Harris Poll, shows that more than 20% of Americans feel it will be harder to buy a home in 2016 than this year, and they suggest that is because of the impending rise in interest rates.
Both CoreLogic and Effinger predict that rents will rise, but for different reasons. The CoreLogic report cites a simple increase in demand for the possible higher rental rates, where Effinger ties it into the fact that credit will be tighter in 2016. In contrast, the Trulia prediction about renting is that renters may be spared increasing rates, due to the increase in construction of multi-family properties that occurred this year.
Enthusiasm to Buy
Despite the rise in interest rates, Trulia’s poll finds that the percentage of those who want to become homeowners rose by 1% from a year ago, and that number is 2% among millennials. The CoreLogic report agrees, predicting that, though home prices will increase, home sales will as well, due to an improved economy and higher consumer confidence. On this point, Effinger predicts the exact opposite. He feels economic growth has not been strong enough to incite much confidence at all in consumers.
Though it is important to consider all factors when making an important financial decision, like buying a home, no one can say for sure exactly what will happen in 2016, and these predictions aren’t necessarily indicative of what every person’s experience will be.
If you are thinking of buying a home in 2016, check out sites_lonestarfinan2.jumbowp.com to see the latest rates, apply online or connect with an expert.