Freddie Mac is on record stating that it doesn't think that interest rates will rise immensely on 2016, even though the Federal Market Committee's recent announcement that it is raising federal funds rate for the first time since 2006.
Freddie Mac's chief economist, Sean Becketti, said that interest rates should remain at historically low levels, in spite of whatever moves the Federal Reserve is expected to make.
Here are five more housing predictions for 2016:
1. Expect the 30-year fixed-rate mortgage to average below 4.5% for 2016 on an annualized basis.
2. Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015's sales momentum into 2016.
3. Expect house price growth to moderate a bit to 4.4% in 2016, driven in part by the reduction in homebuyer affordability and reduced demand as a result of Fed tightening.
4. Housing activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16% year over year and total home sales to increase 3%.
5. White home purchase will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage origination lower in 2016 than in 2015.
This would be good news for the housing market. If you are planning to sell be prepared with a current market value of your property.
Contract signing in the Midwest and South in February drove pending homes sales to their highest level in nearly 2 years. The National Association of Realtors that it's Pending Home Sales Index rose 3.1% in February over January. The February number is 12% above the level in February 2014.
According to the NAR this is the 6th consecutive month that the index has increased. It has not been this high since June 2013. February is the 10th consecutive month that the index has been above 100 which is considered an average level of activity.
The PHSI is based on the number of contracts executive during the month to purchase existing homes. These contracts are generally reflected as completed sales within 60 days.
According to the NAR's monthly Realtors Confidence Index, the share of first time buyers rose slightly from 28% in January to 29% in February. It was the first increase for this consumer segment since last November.
Several markets remain highly competitive due to supply pressures. Realtors are reporting severe shortages of move in ready properties, and properties in lower price ranges. The return of the first time buyer depends on how quickly inventory shows up on the market.
The NAR forecasts that there will be around 5.25 million existing homes sold in 2015, a 6.4 increase from last year. Home prices are projected to rise about 5.6%.
Pending Home Sales Index is a leading indicator of the spring market. Are you thinking of buying your first home? Or selling and moving to a larger home? Or even down sizing? An appraisal to known the current value of your home is a good place to start.
Keeping warm in winter, especially when we live in the midwest, is important. Keeping warm also comes with hazards, such as fire. Below are some safety tips to help protect your loved ones and your home.
1. Have your furnace checked. It's worth the money to have a professional to inspect and service your furnace once a year. If it's going to conk out, it's better to know trouble is coming.
2. Have your chimneys and vents checked. Fireplaces produce creosote which can ignite. If you light fires frequently, you need a chimney sweep service once a year. When you burn wood, make sure that it is dry and seasoned so that it produces more flame and not smoke.
3. Test smoke alarms. Make sure batteries are fresh. Place smoke alarms in the kitchen laundry room, and bedrooms.
4. Cover the fireplace with a screen. Tempered glass or a metal screen helps protect sparks from leaving the fireplace. Even so, make sure that children and pets sit at least 3 feet away when you light a fire in the fireplace.
5. Beware of lit candles. Candles can set the mood for relaxation, and that's how they get forgotten or knocked over by kids or pets. Light candles only when you are around to watch them and blow them out when you are ready to leave the room. And if you are going to smoke, do it outside.
6. Beware of space heaters. The name should give you a clue, space heaters need space. Like fireplaces, children and pets should not sit closer than 3 feet. Don't put space heaters near curtains, tablecloths or other fluttering fabrics. Make sure the space heaters that you buy have automatic shut offs before reaching dangerous temperatures.
7. Practice an escape route. Businesses have fire drills, your family should, too. Teach your family to crawl to the nearest exit from every room. Show them how to drop and roll if their clothes ever catch on fire.
8. Fire extinguishers can be life savers. Store one under the kitchen sink, and in the hall closet near the bedrooms. Make sure you use the correct setting, A for paper, wood and trash. B for grease and flammable liquids. C for small electrical fires.
9. All household members should know 911. In a fire everyone can be a hero if they know what to do.
2015 has begun. A new year, new resolutions, and new predictions. What will the new year bring for the housing market?
The outlook on the housing market is definitely brighter. After all, 2014 was the best year for the U. S. economic recovery since 2008-2009. With an accelerating economy fueling job and income growth, prospects are good for homeowners and would be home buyers.
1. Mortgage Rates Will Head Back Up
The flip side of the improving economy is that mortgage rates will inevitably head up again. We've had a great run, but the honeymoon is over. It's time to settle in for a relationship that balances job growth with higher, but still reasonable interest rates.
The Federal Reserve has indicated it will raise the federal funds rate, that indirectly affect interest rates. This rate has been near zero since December of 2008.
2. Millennials Will Set Up House
The millennial generation is beginning it's ascent. Some are still struggling with the housing market, and living with their parents to pay off student loans, but not all. With the improvement in the job market, older millennials are planning ahead. The older millennials (25-34) are at the age when many marry and start families.
More than 2/3 of household growth in the next 5 years is expected to come from millennials.
3. Builders Will Break New Ground
The forecast is for an increase of 16% in housing starts in 2015, shifting from multi family properties back to single family homes.
4. Credit Will Continue to Be a Major Factor
Strict mortgage qualification standards are keeping many consumers, especially younger ones, from buying a home with a bank loan. The situation has remained about the same for the last 4 years. it's possible that various new federal housing policy initiatives might help loosen those standards in 2015.
5. We'll Close Out the Foreclosure Crisis
It's been 7 years since the housing bubble burst and foreclosures skyrocketed, but in 2015 we'll see the end of the era. In 2014 we already saw a great improvement in the composition of sales. There are fewer foreclosures and short sales in the mix. Foreclosure inventories were down 30% in 2014, and expected to continue to fall to more normal levels.
While these trends will be apparent nationwide, housing is still a local issue. The situation is different in each market. A current appraisal of your home will help, along with the experience of a real estate professional if you decide to sell or buy