What does the future hold for purchasing homes? What trends will we most likely see for 2016?
There are predictions that it may be harder to buy a home in 2016 due to several factors. Even if our economy is producing more employment, this will most likely lead to interest rates going up because of lack of housing.
A study done by Blomquist reflects 3% of the counties have home prices that are not affordable. Home price may remain stuck, but credit and interest are likely to go up.
Economists have analyzed the home buying of the last year 2015 and are comparing it with 2016. Nationally house prices will heighten as compared with 2015.
The reason for this boom may be because the Generation X (Millennials) will want to buy a home versus paying rent. Those of the baby boom times that already own a home will be more apt to consider home improvements with their equity lines.
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Although most of Generation X may be buying homes some may decide they will put off home buying to catch up with paying their student loans for a year or so.
It is becoming a bit difficult for generation x to buy homes because those born in the baby boom time are keeping their homes more and settling to retire rather than sell their homes
Many reports show that adults are more optimistic in buying a home 2016 than 2015 because rent is too steep to pay. Some places in San Francisco charge rent as high as $5000 for a 2-bedroom apartment.
The government has tried to increase home ownership by reducing insurance premiums.
Is there enough supply for the demand? Speculations are doing rounds that fewer people will choose buying homes due to the following
- If you already own a home, the chances of you taking equity on your home will be used for home improvements rather than buying a newer home. Why is this? Some homeowners are locked in their low-interest mortgage rates from the past and rather stay with the low-interest rates they have than purchase a new home with higher mortgage rates
- With Equity home improvements are a more appealing investment than buying a larger home.
- Many homeowners are still trying to catch up and owe more than what their house is worth which causes them to be underwater
Another trend we see in 2016 is the increasing need for loans.
With the predicted interest rates soaring there is a requisite for loans with a lower down payment. Some of the consumers are using the available credit they have for purposes that don’t relate to their mortgages. A lot of consumers are averaging their credit to improve and invest in personal loans such has automobiles. It is inevitable that although the credit for their current situation is satisfying, it is more expensive in the long run because they could use their equity built on their homes for less.
The market for unaffordable homes could rise if interest rates rise and wages don’t rise significantly.
Many predict that a 30-year mortgage rate will surge to approximately 4.65% compared to the bank rate of 3.88%.
— The Capitalist (@Capitalist_Site) April 28, 2016
Some Factors that would encourage people to buy homes instead of rent.
- Job raise
- Improved credit history
- Lower prices on homes
- Lower interests’ rates
- Increase in Rent
Usually, house prices rise an average of 3% in the nation. The growth has caught the attention of economist who believe that as our economy improves the lack of credit programs and rising home prices will even out. Lack of Credit may inevitably lead to lesser demand for Housing.
Overall the outlook for 2016 by consumers seem optimistic. Consumers are settling for what makes their situation better for the present rather than in the long run as far as loans. As the economy improves, the trend will be that more homeowners will be looking to remodeling of their homes or home improvements. This economy can spike the home improvement jobs up in 2016 and raise contracts.
As more homeowners look for remodeling contracts, more jobs will be created, and remodeling will be an incentive for renters.
Prediction is that more loan programs will include ways of families widening the costs by considering the income of multi-generation families and boarders. These programs are primarily for families who would like to contribute to the home loan. These are recognized revenues even if they are not part of the original loan.
Mortgage brokers association believes new mortgages surely amount to approximately $900 billion. Is home ownership part of the dream and can it be a reality? Those born in Generation x are optimistic about attaining this goal.