US real estate predictions for 2016

This is my special edition of real estate predictions for 2016. The first edition was not published because they were so accurate and spot on that even I was worried about how prescient a real estate professional can be about these matters. Case and point: my predictions for 2015 were much better than one could have anticipated. This was especially so since Federal Reserve Chair Janet Yellen did a Babe Ruth two weeks ago, stepping up and raising interest rates; but not before pointing to the far bleachers, to signify an approaching home run for all the detractor bondholders who said it couldn’t be done.

And although the standard fare among those who are “right” on all matters relating to real estate, my edict will not contain the ominous thirteen predictions—but rather seven very lucky predictions–since that was the same numerical value as the last predictions of the year.

And like an athlete who doesn’t change his jockstrap when on a winning streak (which will eventually result in a visit to the dermatologist), this real estate writer won’t change course or stray from seven predictions. A repeat, so to speak, as I point to the bleachers… and let it be known that this is for all the naysayers who believe in negative amortization, and who doubted the resurgence of American real estate.

Prediction One: Thy Hot Market for 2016 (and the Miss America Runner-Up)

Without a doubt, Miami is an international designation for vacationers and has become a world-class resort community, attracting home and condo buyers from all over the world. If ever there was a time to buy a home in Miami this decade, this is probably it.

The runner-up? Well, according to Housingpredictor.com, it’s San Francisco. Big hurray! In the opinion of some, it is the rich and diverse cultural mix of people that has transformed the Greater Bay Area into a world-class city for many decades, and who have made it their home. Well, that’s no surprise, and given that there are more millionaires housed on that peninsula than anywhere else in the US, it doesn’t hurt that most buyers pay for all homes in cash.

Prediction Two: Those Damn Millennials

Why not go to the horse’s mouth when you’re trying to prove a point in a calculation that might be better left to real estate investigators? Such is the case for Ms. Svenja Gudell, recently appointed Chief Economist at housing site Zillow.com.

“Millennials are going to be bigger and bigger buyers in the market going forward. I don’t think next year we’re going to see a flood of millennials one month or another. They’re just going to come in. They’re taking their time getting to market and buying a house. They will marry later in life. They will have children later in life. Therefore, they will make home buying decisions later in life.

One problem is that inventory is very low, especially at the lower end of the price distribution. There are very few of those available, especially in these markets that have the most jobs. That is particularly the case on the coasts. It is a challenge for them. It is a difficult market. There’s a lot of competition.”

Prediction Three: When Bigger Is Something-Something-But-Not-Really Better

In the interest of giving Ms. Gudell a little more airtime, here’s her take on bigger is better when it comes to whether houses will get smaller or bigger, or lots will get bigger. they will get bigger or smaller. “It’s hard to find new houses available, but there is a trend among builders to build bigger houses on smaller lots. Land is quite expensive, so they are trying to maximize their profits due to high land costs.” “.

Prediction four: expect the “new normal” to be normal

Another economist needs to pick up where Zillow.com’s Ms. Gudell left off, and that’s Jonathan Smoke, chief economist at realtor.com®, who believes the following:

“This slowdown is not an indication of a problem, it’s just a return to normalcy. We’ve lived through 15 years of truly abnormal trends, and after removing the devastating effects of the housing slump, we’re finally seeing signs of a more normal condition.” .” New construction and distressed sales are expected to return to more historic levels, and home prices are expected to continue at “more normal rates consistent with a more balanced market.”

Prediction five: Drones on the ground

Technically speaking, if you’re a real estate agent, you still need an FAA license to photograph houses for marketing purposes. To date, there has only been one real estate broker who can photograph properties with a drone, and that is Douglas Trudeaut of Tucson, AZ, the first agent to receive an exemption under FAA rules that allows a real estate professional roots take pictures.

So, 2016 will be different for the tech-savvy realtors who are about to get carried away with their newly purchased Radio Shack drone — probably not, but you can bet the National Association of Realtors (NAR), will spend a little more dollars when they start to pressure the president of the FAA in 2016.

Prediction Six: Mortgage Rates —- Boouuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuu!

Mortgage rates are likely to be volatile in 2016. But the Federal Reserve’s recent move to raise interest rates should see mortgage rates rise higher in the new year than the record lows they’ve been at for years, all according to a breed industry professional. The 30-year fixed-rate mortgage is likely to end 2016 about 60 basis points above its current level.

This according to NAR’s Jonathan Smoke. “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase. However, higher rates will increase monthly payments, and along with that, the debt-to-income ratio will also increase.” Markets with the highest home prices will see more of the effects of higher rates.

Most mortgage rate divas (guys and gals alike) are predicting chaos in 2016. If you call 50 or 60 basis points chaos, then I’ve got some real estate in Florida I’d like to sell you. For those who aren’t sure what 50 or 60 basis points is, it’s about half a point higher on your mortgage rate. (100 basis points is 1% percentage point). So, given that the market average for a 30-year fixed-rate home mortgage is about 5 percent, when you can expect the prevailing rate in December 2016 to be about 5½ percent.

Prediction Seven: FannieMae Brings Home the Bacon

We’ve all heard of quantitative easing (I think). So we won’t expect a return to the 2000s, where all it took was a heartbeat and a zero down payment to close on a house. In 2016, there are new loan programs underway that make qualifying for a loan a little easier. According to TheStreet.com, Fannie Mae intends to make it easier for qualified borrowers to receive a loan. Mortgage underwriting across the industry is starting to reflect the improvements.

To complement this trend, Fannie Mae recently opened the door for more borrowers to take out a loan. Qualified borrowers can now put as little as 3% down on a home. Perhaps even more important, however, is the implementation of the HomeReady mortgage program. Look for more of that program to be adopted by some of the biggest banks in 2016.

In the final analysis, there are a lot of economic and non-fundamental fundamentals that will affect the trajectory of home prices, trends, and technology and lender practices in 2016. I’ll tell you in 2017 if that was true.