It is hard to imagine shopping for a new house — much less moving — during a Minnesota January. Boots and scarves and down-filled everything can be just too cumbersome and sloppy to deal with to convince most of us to make the rounds of houses for sale. So now seems the perfect time to talk about housing market predictions for 2016.
National real estate brokerage Redfin released its forecast for the year in mid-December, and the data painted a fairly uninteresting picture. Sales will slow, increasing at half the rate they did during 2015. Home prices reached all-time highs in more than 30 major markets — Minneapolis was not among them — resulting a 6 percent growth rate in 2015. However, 2016 will see that pace slow to somewhere between 3.5 percent and 4.5 percent.
In spite of increases in mortgage interest rates, Redfin believes that buyers will have an easier time securing loans. Why? Changes are afoot in the way lenders determine creditworthiness. Congress chimed in before the holiday break with a bill that would allow federally-backed lenders to use credit scores from sources other than FICO.
Some of these changes are designed to attract millennials to home buying. For some reason, the 18- to 30-year-old crowd has been reluctant to purchase. Redfin suggests that they have been saving up for larger down payments, and the time is right: Interest rates aren’t soaring, home prices are stable, and loans are easier to secure.
Don’t look for a land rush, though. We’ll explain in our next post.
Source: Housing Wire, “Here’s why 2016 will bring good news for potential homebuyers,” Brena Swanson, Dec. 14, 2015