4 real estate trends we’ll see in 2016

4 real estate trends we’ll see in 2016

Growth in real estate shown on graph



The Federal Reserve’s anticipated rise in interest rates is expected to impact all sorts of real-estate transactions, whether you’re buying, selling or renting. Here’s what you need to know for the coming year if you’re ready to take the big plunge as a homeowner, or finally get that deluxe apartment in the sky.

Home prices may stagnate

As the Federal Reserve worries less about stimulus and more about keeping inflation in check with an economy that’s finally producing jobs, interest rates will go up, increasing the cost of credit for those seeking to purchase a home.

“Affordability is going to be a much bigger hindrance going into 2016,” said Daren Blomquist, vice president of research at Irvine, Calif.-based RealtyTrac, a realty research group. Blomquist said that currently about 3% of the nearly 600 U.S. counties his firm tracks have home prices that are “unaffordable” to the average American weekly wage earner (who made $1,056 a week in the first quarter of 2015). If interest rates top 5%, Blomquist expects a surge of unaffordable markets.

“If interest rates rise, and home prices rise, and wages rise only tepidly, we could see the 3% of unaffordable markets rise to as much as 25%. Stagnation of home price appreciation would be a likely scenario,” Blomquist said.

Realtor.com (which is owned by MarketWatch’s parent company, News Corp.NWS, -6.73%  ) predicts that 30-year mortgage rates will increase to 4.65% on average by the end of 2016, compared with current 30-year rates as compiled byBankrate.com of 3.88%.

At a 4.65% interest rate with a 30-year term and a 20% down payment of $36,600, a home at the current (November 2015) median value of $183,000 would have an estimated mortgage payment of $945, including property taxes and insurance. That compares to a current mortgage payment of about $879 a month including taxes and insurance at 3.88%

Buy Vs Rent in 2016 Click HERE to view the rest of the article.

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