Now that we are in the start of a new year, sellers and buyers want to know what may be in store for the year to come. 2015 saw some great strides in improvements with many housing markets improving across the country in both the number of sales and home values. According to an article published in The Fiscal Times and Yahoo Finance, there are some key trends the nation will see in 2016. I have listed a brief summary of these trends for you to keep in mind, especially if you plan to sell or buy a home in the coming year.
Home prices and interest rates will be on the rise, but only at a gradual pace. According to Zillow forecasts, home values nationally will rise on average 3.5%. The California Association of Realtors® (CAR), expects to see home values across the state rise 3.2%. Economists are saying that interest rates will rise in response to expected increases from the Federal Reserve. The good news is rates on 30 year mortgages are expected to see a small increase, going from 4.0% to 4.5% in 2016. In terms of existing home sales, CAR anticipates an increase of 6.3% in the number of sales for the state overall.
Currently the median age of a first time home buyer is the highest it has ever been, age 33. This is a reflection of the housing crisis we went through and the resulting economic changes that have affected many young adults since then. With higher rents and wages remaining stationary for many, saving for a down payment has been challenging. According to RealtyTrac, this trend is expected to continue for many in 2016. But there may be a bit of good news to help home buyers. Credit scoring and its effects on home loan qualifications could become more flexible over the next year. As refinancing is expected to slow down, banks may become more flexible toward credit scores for new mortgages in an effort to “win” more borrowers.
When it comes to home trends, experts forecast that suburbs will make a return in popularity. The Urban Village idea has taken hold in more and more major metro areas across the country, as witnessed by the continual move of employers out of city centers. The most attractive suburbs have walkable main streets, work opportunities and public transportation. In addition to these features, more buyers will be looking for eco-friendly homes with smart features built in. The savings that can be achieved with energy smart homes is highly attractive. This in turn will make new homes more in demand, as new construction is increasingly including these types of features in homes, making them ready built for those who are environmentally conscious.
For California in particular, the 2016 projections released by CAR highlight that certain areas of the state will see more growth than others. Less expensive areas which are experiencing more job growth will see better sales results in 2016, San Bernardino, the Central Valley and Solano County being some examples. In areas such as San Francisco Bay, home sales will rise but at a slower pace due to the smaller inventory and higher list prices. California as a state is widely diverse when it comes to housing markets, but our growing economy and the national trends expected for the coming year will help see growth in home sales overall.
When you are ready to buy or sell a home, we at Haylen Group are here to help you with all of your real estate needs! If you are unsure what your options are, call Helen Chong at (408) 800-LIST or email at Helen@HaylenGroup.com. You can also visit us at our website for available listings and additional information.