How is the 2016 housing market shaping up? According to at least one expert source it's looking good! According to mortgage investing giant Freddie Mac, fewer mortgage delinquencies, paired with stronger home purchase applications and a growing economy point to a favorable year for housing. This is good news for buyers, sellers, homeowners and real estate professionals.
Freddie Mac said its latest Multi-Indicator Market Index (MiMi) showed the U.S. housing market grew by more than 6 percent over the past year.
The Index showed with two additional states--New York and Kansas--entering their outer range of stable housing activity, as well as three more metro areas: New York, Minneapolis and Palm Bay, Fla.
Freddie Mac Deputy Chief Economist Len Kiefer said the 6.31 percent annual growth is the best improvement seen in the MiMi since July 2014.
"While strong home purchase applications and rising home values in some markets are contributing to this improvement, its largely more of a reflection of mortgage delinquencies continuing to decline at a steady pace, especially in those hardest hit markets and a better employment picture overall," Keifer said.
[In addition] 43 states and 89 of the top 100 metros showed an improving three-month trend. The same time last year, 36 states and 70 of the top 100 metro areas showed an improving three-month trend.
"We do expect homebuyer affordability to decrease in the coming year, but we don't expect tighter monetary policy to generate a spike in longer-term interest rates in the foreseeable future," Keifer said. "The Fed has committed publicly to measured increases in short-term rates. While mortgage rates will rise modestly, they will still remain at historically low levels. Combined with stronger job and income growth, the net result may be strong growth in household formation, construction, and home sales."
It's an old saying, but it's as true today as it was 20 years ago. Real estate values are driven locally. Unfortunately, many news and media outlets have a tendency to pick up on the theme of the major metropolitan markets. The coasts and the "big city stories." Sometimes the smaller markets do not reflect what is happening in “urbania.” I believe that we are in a period where a rising tide will lift all boats and the exceptions will be smaller markets that may have lost a major employer or some other disruptive circumstance. But those are the exceptions, not the rule. Most markets will experience solid appreciation rates, and we will measure differences in those rates as opposed to who’s up and who’s down.