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CoreLogic delivers its housing market predictions for 2016

By Mike Wheatley | December 8, 2015

It's that time of the year again when everyone and his dog feels the need to make a few predictions for the year ahead, and not to be outdone, real estate analysis firm CoreLogic has published its own list of what to expect.


According to CoreLogic, the U.S. housing market will expand for the eighth year in succession, bringing with it rising home prices, rising rents and an increase in the key interest rate.

“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," Frank Nothaft, senior vice president and chief economist at CoreLogic, said in a statement.

According to Nothaft, here are five key happenings we can expect to impact on real estate in the next year:

1. Interest rates go up

The Federal Reserve is expected to increase short-term interest rates by around one percentage point before the end of next year. As a result, homeowners with adjustable-rate mortgages or home-equity loans will see a rise in their own interest rates. CoreLogic sticks its neck out a bit further though and suggests this will also affect those with fixed-rate mortgages, who will see perhaps a half a percentage point rise to 4.5% for 30-year loans. However, CoreLogic says mortgage rates will still be at a historical low overall.

2. New households to drive demand

CoreLogic warns that housing demand will be significantly impacted by the formation of 1.25 million new households over the next year. Improvements in the labor market and reduced unemployment will be the main forces driving new household formation, adding to increased pressure on housing, particularly in the rental market…

3. ...leading to greater pressure on the rental market

CoreLogic says rental vacancy rates are already at their lowest level in 20 years, and high demand for both homes and apartments will continue throughout 2016.

4. Home prices and sales will increased

Rentals are hot, but purchases could be even hotter in 2016. CoreLogic says purchase demand may reach its highest level since 207, with home prices at the national level rising at a faster rate than inflation. Even so, home prices will rise at a slightly slower rate than last year, of around 4 to 5 percent instead of the 6 percent we saw this year. CoreLogic attributes rising home prices to the improving economy, which in turn enhances most homeowner's feelings of financial security.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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