Why Buying a House Now Might Make Sense
By Burt Carey
Housing booms and busts are a way of life in the United States. Oftentimes, home sales figures can be indicators of an economy’s strength or a foreteller of future economic times.
More than just a few key factors must be at work for a robust housing market to take place. No longer do economists look at the simplicity of
an improving jobs market to determine future home sales. Nowadays, mortgage loan rates, government regulations, the cost of renting, overall home prices, and consumer attitudes must also be factored into any sober discussion about housing.
That’s why even housing experts are hedging their bets about 2016 and whether it will be a good time to buy a home.
Several forces are at work, some indicating good home-buying conditions, and others that could be warning signs.
Brandon Cornett of the Home Buying Institute says it’s difficult to make predictions about 2016 because housing conditions vary from city to city. He points out that Atlanta has enjoyed an 11 percent increase in home prices this year, with another 5.2 percent expected in 2016. But in Orange County, Calif., home prices have fallen 1.5 percent, and there’s little hope it will improve next year.
“As a home buyer, the first thing you need to realize is that housing trends and conditions vary widely from one local market to the next,” Cornett says. “So take with a grain of salt all of the mainstream news stories that talk about ‘the’ housing market. Those stories may or may not apply to you.”
Analysts say one national trend they expect will hold up in 2016 is that home price increases will moderate somewhat. Zillow chief economist Svenja Gudell joins with Lawrence Yun from the National Association of Realtors in predicting overall increases in the 2-4 percent range.
On the other side of that equation is that while overall unemployment has fallen, wages are expected to remain flat. Home sales suffer anytime increases in home values outpace wage increases.
Experts do expect to see more homes for sale in 2016, and builders are said to be focusing on starter houses and middle-range homes, according to Zillow.
Virtually the entire industry agrees that interest rates have hit bottom and will continue climbing through 2016. As the Federal Reserve raises its rates, mortgage bankers will follow suit with gradual increases. “You are likely to get the best rate you will possibly see, perhaps in your lifetimes through the majority of next year, but certainly, the earlier the better,” said Jonathan Smoke, chief economist at Realtor.com.
Rental prices are not expected to decrease in the next year, and that could push even more buyers into the home-buying market.
If you’ve been sitting on the fence, waiting for conditions to be right for buying a house, 2016 could very well be your year.