Housing predictions for 2016

With 2015 coming to a close, what can the real estate industry expect in 2016?

Recently released, the report Five 2016 Housing Market Predictions from Redfin offers a look into next year’s market. All in all, 2016 should be “fairly uneventful.” Below are some highlights from their release.

Prices and sales will continue to grow, but slower than 2015.

More homeowners are expected to stay in their current homes in 2016. It is believed that sales will grow at about half the pace they did in 2015, and prices will rise 3.5 to 4.5 percent, down from a high 6 percent in 2015.

Obtaining credit will be easier. 

The report suggests that more Americans will be able to qualify for a mortgage in 2015, as lenders will begin to explore other ways to measure credit. Things like rental history and utility payments will be given more weight in credit scores. Hopefully, improved credit scores will balance the increased mortgage rates.

The number of first-time buyers will grow. 

With a more welcoming market, it is believed that first-time homebuyers will be a higher percentage of homebuyers in 2016. With the chance of better credit and slowed home price growth, first-time homebuyers will have more of an opportunity to buy. The report also suggests that those who were unable to purchase a home in 2015 may have saved for bigger down payments for a home in 2016.

The market will slow down. 

The year 2015 was fast. From January to October, the average home was on the market for 36 days. This is a four-day decrease from the same time period 2014, where the average home was on the market for 40 days. Thanks to lower inventory, bidding wars will take place. Cash sales are also expected to decrease.

Prices and sales will continue to grow, but not as quickly.

The biggest concern for 2016’s housing market is the lack of inventory, especially with more affordable homes. The number of homes for sale decreased from 2014 to 2015. Across 60 metro areas, inventory was down 4 percent compared to 2014. Homeowners are hesitant to sell, thanks to equity. And with mortgage rates rising, some homeowners with low rates aren’t enthusiastic about moving and having to sign for a higher mortgage rate.