The National Association of Realtors unveiled their 2016 forecast for the national housing market and here is a recap of what to expect this year!
Overall, NAR predicts interest rates to rise by year’s end to between 4.7 and 5.0%. For perspective, an increase of 1% can reduce a buyer’s buying power by 10%. All eyes will be on how this change will impact the housing market. Will it keep buyers out of the market, or will it motivate buyers to move quickly and lock in a lower rate.
Slow home starts (new homes being built), limited inventory and weak GDP growth (1.5% vs. an average of 3%) may also stall our overall housing sales. However, NAR is predicting 4-5% growth in median sales prices. The growth still outpaces wages, which typically grow 2-3% each year.
It’s expected that the following markets will outperform the national average due to their above average job growth: Grand Rapids, Salt Lake City, Atlanta, Charlotte, Riverside (CA), Portland (OR), Tampa and Providence.
Locally, the big question is of course the impact of our property tax hike. I’ve seen some buyers express concern over this but have not seen much of an impact yet; I have, however, heard stories from colleagues who have had contracts fall apart after a buyer factored in the increase of their tax bill (this is usually reserved for high end properties where the change in the bill can be substantial-5 figures)