Every year, I spend some time in January to reflect on what we can learn from the previous year and what we can expect for the New Year in the local real estate market. In a recent press release), I was happy to report that 2016 is shaping up to be one of the best years yet for the market. My forecast calls out key factors that paint a positive picture:
- We have a stable local economy. While we’ve seen some slowing in the energy industry locally, technology companies are continuing to move in. In fact, the Huffington Post just cited in “Top 10 Cities Techies Should Consider Moving to In 2016.”
- Interest rates will remain historically low, even if we experience a few modest rate hikes this year. Low interest rates mean that homebuyers in 2016 will have significantly more buying power.
- Increase in Wages: As unemployment – and underemployment -- drops locally, it will force employers to give raises they may have been holding back. Greater earnings enable employees to afford a more expensive home.
- Higher confidence in the market among buyers translates into a higher comfort level for investing in a larger home.
- We’re also expecting an ease in credit restrictions. As lenders get more comfortable with increased government regulation, they’ll broaden their lending profile criteria.
- Since 2016 is a presidential election year, we may see some increased federal government spending, which buoys consumer confidence and also puts a few more dollars in consumers’ pockets.
- Some stock market worries about foreign economies and fears about low oil prices are actually good for the average homeowner. Lower energy costs mean more disposable dollars and international concerns may mean that the Fed will probably be slower with any rate hikes, which would keep mortgage rates low.
If you are thinking about moving in the near future, you should consider buying in 2016 so you can get a more expensive home for a lower payment. If you wait to purchase until next year or later when rates are higher, you may end up buying less house for the same amount of payment.