Real Estate Sales in 2016 Will Change

If you are planning to sell a home in 2016, you should be aware of some changes occurring in a market that fluctuates frequently. The housing market has changed dramatically over the past 10 or 11 years. What has historically been a stable and dependable market now sways with the economic times and the economics of local communities.

Yes, over the decades and even centuries, real estate in some small markets has shriveled into ghost towns but generally, real estate has been an investment that could be depended on to appreciate in value over time. That long era is most likely over. Before plummeting during 2008 and 2009, the real estate market hit its peak during 2006 and 2007. Since 2102, the Case-Shiller National Home Price Index is again close to the 2006 and 2007 values in most markets. The big question is where it will go in 2016?


Seller’s Market or a Dull Market

If you are in San Francisco, Manhattan, or Seattle, you can expect the sellers market to continue and bidding wars to break out for the few properties that come on the market. However, most markets are likely to stagnate in 2016 if interest rates increase. So far, after the Federal Reserve increased interest slightly in December, mortgage rates have not been affected.

Although most markets have been a sellers’ market in most places for the past couple of years, that might well change in 2016. One down side to the market has been want-to-be buyers that can’t qualify for mortgages. The biggest cause of this has been foreclosures and damaged credit scores resulting from the Great Recession. Yes, the Great Recession is still affecting the lives of everyday people. Rising interest rates will cause the cost of mortgages to increase. Higher monthly mortgage rates mean fewer people will qualify. In many markets, that means sellers will have to keep prices down so that more people can qualify.

Buy in 2016

The year 2016 could shift to a buyers’ market or a middle market for many locations. Maybe not the hot markets but there is a lot more out there. Prices can be expected to stabilize. Most analysts expect price increases to be limited to about 3.5 percent this year compared to 8 percent or more over the past few years.

It’s a bit of a strange world but the slow down in home appreciation will actually cause more people to put their homes up for sale. People that have wanted to sell have been watching the market to see how high it will go. People have dozens of reasons to hang on to a house watching it appreciate in value that they would just as soon sell. Maybe they are empty nesters looking to down size, a growing family needing more space, financially prosperous looking to up scale, or a landlord wanting out of the business. People in these and many other situations are going to see prices stagnate in 2016 and decide it’s the time to sell before a reverse in the market begins.

Still, rent prices are expected to continue climbing. Early in 2016 might be the best chance of your life to make the move to buy your home. Of course, you never know. Late 2016 or next year might see a complete reversal of the market. If the world economy goes into decline, home prices will almost certainly follow. Your guess is as good as mine.

Please leave a comment if this article was helpful or if you have a question.

PhotoAuthor bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 35 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. In the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.