Residential
Real Estate News
CoreLogic Releases 2016 U.S. Housing Market Predictions

CoreLogic Releases 2016 U.S. Housing Market Predictions


According to CoreLogic's chief economist Dr. Frank Nothaft, U.S. home sales and prices are up, rents continue to rise, and vacancy rates will stay low - all in 2016.

CoreLogic's newly released 2016 Outlook for Housing, which provides predictions and forecasts for the housing economy, says we can expect to see the following five features in next year's U.S. housing market.

Interest rates will gradually move higher

Homeowners who have adjustable-rate mortgages or home-equity loans will most likely see a rise in their interest rate because the Federal Reserve is expected to raise short-term interest rates approximately one percentage point between now and the end of 2016. Fixed-rate mortgages will also rise, perhaps up one-half of a percentage point between now and the end of 2016, reaching 4.5 percent for 30-year loans. Despite this increase in interest rates, mortgage rates will remain historically low (Exhibit 2).

Household formations will significantly add to housing demand

More than 1.25 million new households will be formed in 2016 due to improvements in the labor market and lower unemployment rates. These new household formations will increase housing demand, specifically in the rental market.

Rental homes will continue to be in high demand

Rental vacancy rates are at or near their lowest levels in 20 years, and rents are rising faster than inflation. High demand for rental homes--both apartments and houses--will likely continue in 2016, especially from new, young households.

Home sales and home prices will likely increase

Not only is the rental market hot, but overall purchase demand may lift 2016 home sales to the best year since 2007. Nationally, home prices will likely rise at a quicker rate than inflation, but not at the same rate as last year. The CoreLogic Home Price Index showed a year-over-year increase of 6 percent in the last 12 months; however, 2016 is only expected to see increases of 4-5 percent. This increase in home sales and home prices can be attributed to the improved economy, which has enhanced homeowners' feelings of financial security.

The dollar volume of single-family mortgage originations will fall approximately 10 percent

The single-family mortgage origination decline will occur even though home equity lending is expected to rise and originations of home purchase loans will likely rise about 10 percent in volume next year. The growth in those two areas will be offset by a 34 percent drop in refinance, reflecting the higher mortgage rates and dwindling pool of borrowers with a strong financial incentive to refinance (Exhibit 3). While single-family mortgage originations are expected to fall, multifamily originations will likely rise. This gain reflects the higher property values and new construction that adds to permanent mortgage usage.

"As we approach the start of 2016, the consensus view among economists is that economic growth will continue, and the U.S. will enter an eighth consecutive year of expansion in the second half of next year. Most forecasts place growth at 2 and 3 percent during 2016, creating enough jobs to exert downward pressure on the national unemployment rate," said Nothaft.

corelogic-housing-market-forecast-1.jpg


corelogic-housing-market-forecast-2.jpg


corelogic-housing-market-forecast-3.jpg

Sponsored by

Comment with Facebook


Copyright 2010 - 2019 WORLD PROPERTY JOURNAL, INC. All Rights Reserved.

Join 34,000+ real estate professionals worldwide who receive our free weekly newsletter

GO
Advertisement
News Search
Go

Listing of The Day

Luxury Property Spotlight

Reader Poll

Advertisement
Featured International Listings
×
WORLD PROPERTY JOURNAL
 
Free News Alerts
 

Sign up now to receive the latest local & global real estate news in your inbox.

GO