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So here we are, another year and everyone wants to know if 2016 will be a good one. First and foremost, lets look at the facts.

  We are coming out of a year when unit sales across the 4 regions increased from the previous year, up to nearly 8% in the Northeast. And this happened at a time when the listing inventory was at a level which may very well have been an all-time low.

As far as price appreciation, same “positive” picture (for the sellers that is). When the final 2015 numbers are released, they will show that housing prices rose over 3% nationally. The West, as a whole, led the pack with about 5%, this was pretty much the prognostic from this time last year.

We are in a good place, today, as we start 2016. The economy is strong. Finally. The agonizingly long/slow recovery from the 2007-2009 financial crisis produced stability & growth. We are looking at 2.5-2.8%% growth this year and an unemployment rate down in the neighborhood of 4.7%. Combine that with a strong consumer confidence (steady improvement since 2009)…. And the fact that housing formation (creating needs in the real estate sector) surged with 1.7 million new households in 2015 …. And the fact that vacancy rates in the commercial/business arena are as low as we've seen them since the late 90s (15.6% for offices, 13.2% for retail & 7.1% according to NAR....All bodes well indeed for the US economic outlook.

It is expected that home sales, this year, will be in the neighborhood of 5.5M units. If this comes true, it will be roughly 3.5% better than last year and 30% more than in 2010. Prices will continue their slow and moderate rise, between 3% and 4.5% nationally. Now all of this doesn't mean that there may not be some small clouds on the horizon to keep an eye on, namely... 

  • Interest rates: The Fed did it; it raised rates for the first time in nearly 10 years. It is not the beginning of the end, just merely the end of the doubt. Frankly it will make no difference to speak of on the real estate activity. The rise should not exceed 1% by year-end. Business as usual.
  • Home ownership: it has dropped and there is a question mark as to whether the decline will continue. Aside from the over 65, all other age groups are down. The Millennials, only account for 30% of home sales while they historically were good for 36%. We are counting on them in 2016 and with rents being so high, it makes sense for them to buy and start building family wealth!
  • Length of home ownership: If we use the CAR stats for California, where the turnover is known to be fast, we notice that from 4 years in 1989, the number of years people owned a home before selling jumped to 8 in 2013 and now stands at 10.
  • Investors: They were slow to buy over the last 2 years. Distressed sales are all but gone and prices have skyrocketed to the point where the cost and the risk are too high. With the economy growing, the picture is likely to improve all year.(Another reason why, when a distressed sale does come on the market these days, cash investors are all over it!)
  • Cash buyers: their numbers are shrinking. With the cost of mortgage money going up a notch, the downtrend may be reversed in 2016.
  • International buyers: CAR reports that their 2015 share (4% of all sales) was the lowest in 8 years. Don’t worry. Even a strong dollar and a weak global outlook will not stop or even slow wealthy foreign investors from rushing to buy US real estate.
  • Affordability: Not expecting great news for first-time buyers. One suggestion though. If you are one of them, buy now, even if it hurts. It will not get any easier anytime soon.
  • It’s an election year… Whatever that means!
To a good year in 2016!
 
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