As we head into the winter and folks are considering dropping out of the homebuying pool to wait it out we’re frequently asked what will happen if they wait until next year to buy. If only the Lindahl Team had a real estate crystal ball and we could cut right to the chase to tell you what’s going to happen in the Bloomington real estate market. Instead, we have to rely on economic forecasts and our MLS statistics for any trends we might see. We can, however, get pretty close to a prediction with those tools. So, let’s dive in.
The U.S. economy is either going gangbusters with a rosy outlook or it’s just mediocre, depending on whom you ask. Those with money in the stock market will tell you it’s just so-so while anyone that works for the government will tell you it’s amazing.
Job gains are slowing down and, with the health insurance premiums expected to skyrocket, Americans are choosing to hang on to their money rather than spend it. Because of these factors, financial experts are downgrading their forecasts for growth. The real estate market – and related industries, such as home furnishings and carpet - is the economy’s bright spot. Or it was. In mid-October we learned that home foreclosures rose over last year’s figures and 33 states saw increases in foreclosures. No, Minnesota is not among them.
Will home prices rise?
That’s the burning question for folks who plan on buying a home down the road. The Home Buying Institute says “we probably won’t see as many double-digit home price gains in 2016, like we did this year,” which is actually good news for you as a homebuyer on a budget. Now, this isn’t to say that Bloomington home prices will remain flat, just that they may not rise as much, on average, as they did this year.
There are several reasons for the slower pace of home price increases. These include new home construction ramping up, adding more homes to area inventories (not so much in Bloomington, but nationwide). CoreLogic, a major provider of financial data services to the real estate industries says to look for 4.7 percent increase in home prices from now through July 2016.
About those mortgage rates
Some financial analysts see mortgage rates begin inching up in late 2015 and into next year. In September, Freddie Mac’s chief economist forecasted that the average rate for a 30-year fixed mortgage will sit at 4.2 percent by the end of 2015 and to 5.1 percent by late 2016.
These hikes will of course knock some would-be homeowners out of the real estate market. Hopefully you aren’t among them.
Basically. . .it all depends
The housing market’s strength depends on a number of variables, one of the most important of which is the health of the job market. Although it’s better than it was during the recession, hiring is still weak, something that Fed policy makers will look at when deciding whether or not to raise rates.
I know this is a lot to consider as you think about your future home-buying prospects but, really, there’s nothing you can do about anything that will impact the housing market. My best advice to you is to jump in as soon as you can.