6 Economists Forecast the 2016 Housing Market

Trends, forecasts and more from some of the most prominent economic minds in the industry

As we ring in a New Year, Housing News Report asked six prominent economists to forecast what 2016 will bring for the U.S. housing market.

For housing, 2015 was a strong year, with home sales high and home prices continuing to rise.

Overall, the economists surveyed were cautiously optimistic about 2016 when it comes to home prices, home sales, interest rates and the impact of loosening lending standards that have recently been introduced by government agencies. Since 2016 is a Presidential election year, the economists were cagey when it comes to regulatory changes to Fannie Mae and Freddie Mac.

Here’s what they are forecasting for 2016:

What will be the most important housing market trend(s) in 2016 and why?

Alex Villacorta, chief economist, Clear Capital: The two most important housing market trends to watch in 2016 will be the continued growth of rental rates and the moderating trend in home prices. The pattern seen in 2015 was largely characterized by a white-hot rental market, and if this continues, more households will likely choose to rent over buy in 2016.

In addition to driving rental prices up and vacancy rates down, this trend disengages an increasing proportion of potential home buyers — evidenced by the lowest homeownership rate in almost 50 years. Adding insult to injury for the purchase market, increasing rental rates continue to make it more difficult for potential buyers to save up for a down payment.

In 2016 we’ll use data from Clear Capital’s Home Data Index to see, at a local level, when the tide turns from rental to purchase demand. Many markets are already hospitable for buyers, but we have yet to see the demand. This implies that consumer confidence and the inability to overcome the barriers to purchase are a real headwind to a fully engaged housing market, especially for first-time home buyers.

As the year evolves we’ll be watching both rent and purchase trends closely, as a waning pattern in rental prices will suggest that momentum is shifting to the broader housing market, which should result in a more robust price growth in 2016.

A waning pattern in rental prices will suggest that momentum is shifting.

A headshot of Jonathan Smoke

Jonathan Smoke

Jonathan Smoke, chief economist, realtor.com:Demand for for-sale housing will grow and will continue to be dominated by older millennials, aged 25 to 34. This demographic has the potential to claim a third of home sales in 2016 and represent 2 million home purchases.

Two other demographics will also be dominant forces on the buy side but will also be a key part of providing the necessary inventory on the sell side. Gen-X is in prime earning years and thus is also experiencing improvements in their economic circumstances, which include more relocations and seeking better neighborhoods for their families. Older boomers are approaching — or already in — retirement and seeking to downsize or lock in a lower cost of living. Together, these two generations will provide much of the suburban inventory that millennials desire to start their own families.

Supply will also improve as a result of additional growth in new construction and particularly in more single-family construction. The growth will be in more affordable price points, which will help bring down the average new home prices and average size of new homes, which have grown dramatically so far in the recovery as builders principally focused on the move-up, luxury, and active adult segments.

Mortgage rates should also begin their long-anticipated ascent as the Federal Reserve attempts to “thread the needle” on influencing rates up without negatively impacting economic growth. The increases in mortgage rates will likely be lower than the increases in short-term interest rates created by Fed policy as global weakness and a strong dollar limit more pronounced movement in long bonds. Mortgage rates will also be volatile, moving up and down by day and week, similar to how we’ve seen the market in 2015, but the key difference will be a more pronounced longer trend towards higher rates.

New Home Sales & NAR Existing Home Sales - Jan05-Dec15

The move up in mortgage rates should be a net positive to the market as fence-sitting sellers and buyers begin to understand that rates are moving higher and decide to jump into the market while they remain at such historically low levels.

The final key trend is that rents will rise more rapidly than prices, adding to the already burdensome level of rents that exist in more than 85 percent of the markets in the country. In the near term, this reinforces the consumer’s decision to buy, but higher rents also start to negatively impact the pipeline for future purchases by keeping renting households from saving towards a down payment.

Where is the housing market headed in 2016?

Douglas Duncan, chief economist, Fannie Mae: Lots of discussion of the need for subsidy but the real problem is lack of income growth for low and moderate income households. There will be a discussion of the regulatory cost of land development which is an inhibitor to production of low to moderate income affordable housing. Rents will remain strong as a result.

A headshot of Matthew Gardner

Matthew Gardner

Matthew Gardner, chief economist, Windermere: I expect that we will see more homes for sale. Homeowner equity started to recover in 2013 and has been steadily improving since that time.  As such, I expect that it will increase their likelihood of selling. At last — more inventory!  But I fear that it will still fall short of the supply needed to match demand.

Mark Zandi, chief economist, Moody’s Analytics: The most important housing market trend in 2016 will be the developing housing shortage. New housing construction has picked up in recent years, but it remains well below that needed to meet demand from newly formed households, second home buyers, and obsolescence of the existing stock of homes. Rental and homeowner vacancy rates, which are already very low, will continue to decline. This will continue to push house prices and rents up quickly. The housing shortage will be most acute for lower prices and affordable housing.

Peter Muoio, chief economist, Ten-X: Wage growth will be the key new ingredient for the housing recovery. We have been watching signs of accelerating wage growth percolate through different data sources, but 2016 will see clear and convincing evidence of rising wages. This will help with housing affordability and be the final ingredient for higher household formations and housing demand.

Wage growth will be the key new ingredient for the housing recovery.

The other key 2016 trend will be the pace of interest rate increases. We know the Fed will pull the trigger, but the key question is how fast and strongly they continue to tighten in 2016, as that will affect mortgage rates.

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Posted on February 11, 2016 at 10:10 pm
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , ,

Don’t Make Mistakes Selling Your Home

 

1.     Not preparing to show your home in the right light. It’s critical to make sure when you are getting your home ready to sell that you put items in the right place.  Don’t have too much clutter; arrange furniture so the rooms flow. If you don’t have the right furniture the best bet is to place staging in place of your furniture.  Remember you are looking to get top dollar.

2.Doing a minor home improvement before selling might make sense.

If you have a ½ bath and have room to make it a ¾ bath to increase your selling price or a kitchen renovation to get more money, doesn’t that make sense? Yes!  But don’t get carried away by doing too big of a renovation.

3.     Not hiring an agent. So many people think they can do what an Agent/Broker can do. Are you willing to go through all the steps t get top dollar and then you don’t deal with an action in the right order or miss a timeframe that jeopardizes the deal, it’s critical that you have someone that can represent you to explain all the details. Studies have shown that hiring an Agent/Broker, you’ll get your money worth and it will eliminate a lot of headaches.  Hire a professional to do a professional job.

4.     Putting too high of a sale price. Wanting to get top dollar is everyone’s dream, but setting too high of a sale price can hurt in more than one way.  It will keep the house on the market longer, the first two weeks is when your house sees a lot of action and people.  When a house is on the market longer than a couple of weeks, then buyers believe they can get a bargain or low ball an offer. It’s key to get a BPO, (Brokers Price Opinion) this will provide an price with comps so you can make the right decision on the pricing.

5.     Not hiring the right agent.  You may have a friend or you see a truck that says “Use this truck for free when Moving, hire me” you get a postcard that says discounted fees or free staging. Do you want to think about discount people when selling your home?  You want the right person and the one that thinks outside the box, has great opinions and options to sell your home.

6.     Not exposing your home to the masses.  When interviewing the agents, what is the agent going to do for marketing?  Is she/he going to market to thousands of local agents, what about a Brokers open and open houses for the masses? Email marketing, Video tours on the Internet. Neighborhood mailer about the home. If the neighbors love the neighborhood, they’ll tell their friend about the great neighborhood, SOLD!

7.     Putting restriction on the buyers, not letting buyers access the home. Some sellers, believe they know better than the agent, so they restrict the agent from showing the home, not allow agents market the home strategically. The right agents know how to go to market and know how to sell your home, let the professionals do their job.

8.     Sellers should not be in the home while showing are happening. Several of my clients wanted to show the potential buyers their home, they felt they knew what to show buyers and they wanted to be there for the showings.  This is a big No-No. Buyers and sellers should not be together, buyers want to feel free to talk about the house what they like and don’t like. They may want to do a remodel and the sellers can’t imagine why someone would want to change their home. The best scenario is to have the sellers out of the home during any showing and any open or brokers open.  If they forget something, oh well they can come in after the showings.  Believe you want top dollar, this will shoot them in the foot if they are there while a showing is going on.

 

These are the main items that can help get you on the right rack for positioning your home with the right agent, maximizing your return and getting maximum exposure.  If you are in the Seattle and surrounding areas and you would like to discuss how we Tom Fine could help you, contact Tom today. Todays market is hot for sellers, positioning your home can potentially get more than market value.  Have fun selling your home.

 

 

 

Posted on May 16, 2015 at 7:09 pm
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , , ,

I love working with my clients!

November 5, 2014

To Whom it May Concern:

Tom Fine was our buyer’s agent for our recent home purchase in Green Lake, Seattle. We have decided to pen an unsolicited testimonial to his services.

Our family recently relocated from Australia to Seattle and decided to purchase a home. Luckily for us, we found Tom. Tom was able to explain the real estate market and buying and selling process in Seattle (which differs greatly from what we were used to in Australia). He was tireless in identifying properties that met our criteria and spent countless hours on the road with us explaining the positives and negatives of different localities, housing and building styles while viewing ‘open homes’. He was very flexible and understanding in his approach and his availability.

Tom’s knowledge gained as a building contractor was invaluable. He was able to walk through houses with us explaining potential benefits or pitfalls of the construction, layout, style, materials used and potential areas for improvement or maintenance. Several times he drew our attention to problems with construction that we would not otherwise have noticed.

In the end we found a house we wanted to make an offer for and Tom was able to calmly handle negotiations, helping to secure the house below the asking price in a highly competitive real estate market. He kept us in the loop every step of the way.

Subsequent to closing on the house, Tom has been happy to provide advice and expertise in relation to our plans to improve the property.

We’ve been impressed with Tom and would wholeheartedly recommend his services to others looking to buy or sell a home in Seattle.

Mark and Caroline Gordon
Green Lake, Seattle.

Posted on January 9, 2015 at 6:05 am
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What Does Your Realtor Know?

When I go to purchase items whether it is a small item or large, I look to the salesperson to be knowledgeable about what they are selling, don’t you? So I turn the tables and say here are some questions to ask your Realtor.

What should you expect out of a Realtor?

Let’s discuss the knowledge items.

Your Realtor should have knowledge of the following:
➢ Of the area you are showing with information of schools, parks, and the neighborhood and surrounding neighborhoods
➢ About the structure, basic information, what kind of construction is the structure (Just because I know a lot about this subject I didn’t put this in here, but I expect a salesperson to know what they are selling at least the basic information)
➢ Thoroughly describe the features and benefits of the property
➢ Ability to inform the clients about the forms they are signing and the ability to get them any answer relating to the transaction
➢ Communicate consistently with all parties about updates, changes or modifications of the terms, contracts and schedules, not through text, but phone and email
➢ Ability to discuss the handling of earnest money
➢ What Escrow and Title is and why they are important
➢ Ability to negotiate for the best terms for their clients, know when to talk and when to walk
➢ Follow through, continuation of communicating about the status of the process
➢ Be able to provide their clients with CMA’s (Comparative Market Analysis) for price points of the house whether they are selling or buying, so the clients know what your house value is
➢ Knowing how to maximize your return on investment, preparing your property for sale
➢ Lowering his/her commission will not make the property sell faster, (A realtor should be able to respond to this question, why won’t my property sell faster with a lower commission, *larger dollar sales do have a lower commission structure)
➢ Realtor (Selling) provides you with preliminary costs to sell your home with several scenario’s for different selling prices
➢ Realtor (Buying) provides you closing cost scenario’s, (what it will cost you to purchase a home)
➢ Realtor provides you what the process is for selling or buying and what to expect from the beginning to the end

The items I have pointed out above are key reasons to use a Realtor; another key item is the Code of Ethics that Realtor’s commit to, to be a Realtor. Please note that if you have a license to sell real estate, this does not mean they are a Realtor.

To discuss how I can be of any assistance to you whether you are interested in buying or selling, please contact me, Tom Fine, Broker – Windermere Real Estate, tomfine@windermere.com or call me at 206-434-6561 and I will be glad to help you with your real estate needs. I work with individuals, couples or groups to buy and sell real estate in the state of Washington, from single-family homes, raw land, multifamily properties and investment properties.

Posted on January 8, 2015 at 7:12 am
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Understanding Closing on your New Home

So you are going to buy a home and you hear the word Closing, Title, Escrow, what does this mean to you and how does it affect you and the buying or selling of a property. Closing is also known as the settlement, the settlement of the property you are buying or selling. The settlement includes the accounting of the funds transferred between the two parties by the closing firm also known as the Escrow firm.

The funding source (Buyers Lender) will transfer funds from the lender to Escrow and Escrow will settle all debts associated with the property, such as the sellers mortgage, any utilities, taxes, and insurance or outstanding debts of the sellers associated with the property. The balance after the payoff is known as the capitol gains to the sellers.

Escrow will also transfer the needed funds for the buyer for insurance and taxes.

Escrow is the firm in which typically handles the settlement of the funds, transferring of the funds and coordinating the signing of all the documents by the buyers and sellers. Escrow protects all parties involved by making sure that no funds or properties change hands until all conditions in the agreement have been met.

Title, which is very important establishes who actually owns/owned the property and tracts whom has owned the property over the years. Title must be free and clear, this will make it a marketable title and must be free of any encumbrances (A clouded Title). A clouded title is a property that is not a marketable title (such as an easement issue, a lien against the property, or an encroachment on the property are just a couple of issues that could cloud the title and make the property not have a clear title, therefore should not be transferred to anyone else. Title was set up hundreds of years ago, when travelers where coming across the country and they needed to be reassured that the land/property they where buying was their property. Title was a way to guarantee that the property that they where buying was theirs and not someone else’s.
California or Seattle. Closing is explained in-depth at http://www.homeclosing101.org/index.cfm
and explains what Title is, what Title Insurance is and why you should have Title Insurance.

What is escrow?

Escrow will also transfer the needed funds for the buyer for insurance and taxes.

Escrow is the firm in which typically handles the settlement of the funds, transferring of the funds and coordinating the signing of all the documents by the buyers and sellers. Escrow protects all parties involved by making sure that no funds or properties change hands until all conditions in the agreement have been met.

Title, which is very important establishes who actually owns/owned the property and tracts whom has owned the property over the years. Title must be free and clear, this will make it a marketable title and must be free of any encumbrances (A clouded Title). A clouded title is a property that is not a marketable title (such as an easement issue, a lien against the property, or an encroachment on the property are just a couple of issues that could cloud the title and make the property not have a clear title, therefore should not be transferred to anyone else. Title was set up hundreds of years ago, when travelers where coming across the country and they needed to be reassured that the land/property they where buying was their property. Title was a way to guarantee that the property that they where buying was theirs and not someone else’s.
California or Seattle. Closing is explained in-depth at http://www.homeclosing101.org/index.cfm
and explains what Title is, what Title Insurance is and why you should have Title Insurance.

Posted on November 6, 2014 at 10:05 am
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , ,

Great Video Called a Time-lapse Study

It is great when we run accross articles, videlo's or photo's of great substance or content. A photographer and director made this Timelapse video and I am fan of cideos like these.

Durring my contruction days, weeks, months  well years, I loved to create timelapse photogtraphy. if shows so much in such a short time.

The Shard: A Timelapse Study – A Film by Paul Raftery and Dan Lowe

http://vimeo.com/portfoleo/theshard

 

Here is another Time-lapse video, about Vancouver

http://vimeo.com/95384593

 

Thank you

Tom Fine

Posted on May 18, 2014 at 11:10 am
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , , , , ,

How long do things last in your home?

The life span of your household components

Nothing in life lasts forever – and the same can be said for your home. From the roof to the furnace, every component of your home has a life span, so it’s a good idea to know approximately how many years of service you can expect from them. This information can help when buying or selling your home, budgeting for improvements, and deciding between repairing or replacing when problems arise.

According to a National Association of Home Builders (NAHB) study, the average life expectancy of some home components has decreased over the past few decades.  (This might explain why you’re on your third washing machine while Grandma still has the same indestructible model you remember from childhood.) But the good news is the life span of many other items has actually increased in recent years.

Here’s a look at the average life spans of some common home components (courtesy of NAHB).

Appliances. Of all home components, appliances have the widest variation in life spans. These are averages for all brands and models, and may represent the point which replacing is more cost-effective than repairing. Among major appliances, gas ranges have the longest life expectancy, at about 15 years. Electric ranges, standard-size refrigerators, and clothes dryers last about 13 years, while garbage disposals grind away for about 10 years. Dishwashers, microwave ovens, and mini-refrigerators can all be expected to last about nine years. For furnaces, expect a life span of about 15 years for electric, 18 for gas, and 20 for oil-burning models. Central air-conditioning systems generally beat the heat for 10 to 15 years.

Kitchen & Bath. Countertops of wood, tile, and natural stone will last a lifetime, while cultured marble will last about 20 years. The life span of laminate countertops depends greatly on use and can be 20 years or longer. Kitchen faucets generally last about 15 years.  An enamel-coated steel sink will last five to 10 years; stainless will last at least 30 years; and slate, granite, soapstone, and copper should endure 100 years or longer. Toilets, on average, can serve at least 50 years (parts such as the flush assembly and seat will likely need replacing), and bathroom faucets tend to last about 20 years.

Flooring. Natural flooring materials provide longevity as well as beauty: Wood, marble, slate, and granite should all last 100 years or longer, and tile, 74 to 100 years. Laminate products will survive 15 to 25 years, linoleum about 25 years, and vinyl should endure for about 50 years. Carpet will last eight to 10 years on average, depending on use and maintenance.

Siding, Roofing, Windows. Brick siding normally lasts 100 years or longer, aluminum siding about 80 years, and stucco about 25 years. The life span of wood siding varies dramatically – anywhere from 10 to 100 years – depending on the climate and level of maintenance. For roofs, slate or tile will last about 50 years, wood shingles can endure 25 to 30 years, metal will last about 25 years, and asphalts got you covered for about 20 years. Unclad wood windows will last 30 years or longer, aluminum will last 15 to 20 years, and vinyl windows should keep their seals for 15 to 20 years.

Of course, none of these averages matter if you have a roof that was improperly installed or a dishwasher that was a lemon right off the assembly line. In these cases, early replacement may be the best choice. Conversely, many household components will last longer than you need them to, as we often replace fully functional items for cosmetic reasons, out of a desire for more modern features, or as a part of a quest to be more energy efficient.

Are extended warranties warranted?

Extended warranties, also known as service contracts or service agreements, are sold for all types of household items, from appliances to electronics. They cover service calls and repairs for a specified time beyond the manufacturer’s standard warranty. Essentially, warranty providers (manufacturers, retailers, and outside companies) are betting that a product will be problem-free in the first years of operation, while the consumer who purchases a warranty is betting against reliability.

Warranty providers make a lot of money on extended warranties, and Consumers Union, which publishes Consumer Reports, advises against purchasing them.  You will have to consider whether the cost is worth it to you; for some, it brings a much needed peace of mind when making such a large purchase. Also, consider if it the cost outweighs the value of the item; in some cases it may be less expensive to just replace a broken appliance than pay for insurance or a warranty.

 

Posted in Buying by Tara Sharp

Tom fine Is a Reealtor with Windermere Real Estate Capitol Hill in Seattle Washington, Helping Byers adn Sellers "Making Home Ownership Easy"  Fine Homes NW, Inc.

 

Posted on March 24, 2014 at 5:37 pm
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , ,

Don’t Throw your Money Away! Use the Referral From your Realtor

 

Do you like to throw your money away? If you are like me, I value my money and don't like throwing money away. Don't get me wrong, I do buy things once in a while that might be ridiculous, but at least I am making that choice.  When you pick a mortgage broker, because they are a friend or friend of a friend or they may be a big bank. This may be you are gambling with your money.  

Why do I bring this up, well this happens more than I would like. I have clients that come to me and they have a buddy that is a banker for a large bank and we have a real estate property that we are in contract with. It has a 45 day close.  The banker takes the information and the appraisal doesn't happen for 15 days, (what! 15 days for an appraisal) but the client is told by the banker everything is good and release the financing contingency. Done, Financing contingency is released, no contingencies left.  I tried to interject and emails would not come back to me form the banker, the banker was only responding to his client which is "our client". 5 days before the scheduled close, the client is rejected by underwriting, (What!) The banker said to his client (Suppose to be our client) he can work it out and needs another 5 days. We are now going to 50 days to close. Seller does not accept an extension, guess what, we are so close to the client loosing his earnest money. Why? Because of the buddies relationship with the banker. a large sum of money was on the table as far as the earnest money that was in jeopardy. After an exhausting day with multiple conversations with the listing broker, I was able to work out an extension with working with the listing agent and negotiating a deal. Today, the deal got done, but my gosh, none of us need to have this kind of stress.

What can be learned from this? Please use the referral from your Realtor. 

It is about getting the deal done for our clients, with the least amount of stress to the clients. Our clients need to feel special and that they are being taken care of. It's critical to provide them with updates with the current program and where they sit in the funding process.

This is what we do, getting the job done with the least amount of stress and provide updates and clear and open communication.

More stories to come.

If you need a referral or are looking for a property, contact Tom Fine.

 

Posted on January 25, 2014 at 6:59 am
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , , , , , , , , ,

Tree Masters Makes a Tall Order

 

Tree houses like none other, a creative contractor is creating some very unique and fun tree houses.

Mike Nelson from Fall City, Washington, (Northeast of Seattle) Mike creates a magical outdoor space, bringing happiness in many forms. Mike Nelson is a bubbly energetic contractor with incredible vision. These tree houses are not the typical tree house your father built for you or your friend’s tree house.  See these links for some of the tree houses Mike and his crew has built.

Portfolio

Nelson Treehouse and Supply

This is a cool link to a tree house retreat in Fall City, Washington,  Treehouse Point

Mike has a show on Animal Planet on Fridays; my family enjoy watching this funny cast of characters.

 

You most likely won't get your return on investment as monetarily, yet I would think you would maximize a fulfillment of happiness and pleasure knowing your family has a unique item that other homes in your area may not have. 

 

 

Posted on January 25, 2014 at 5:29 am
Tom Fine | Category: Tom Fine's Blog | Tagged , , , , , , , , , , , , ,

17 Steps to Purchasing a Home

 

Here 17 Steps to purchasing a home. 

This list will prove guidance to understanding the steps to obtaining a home.

As any investment person would say, create a realistic budget and stick with it. This will give you a good perspective of what you can afford a month for a mortgage payment.

The realtor you have selected should be utilizing a process as shown below, will make finding your home a smooth process.

In each of the steps below there are details to understanding each of these steps

The 17 steps to home ownership

  1. Save money for down payment
  2. Select a Realtor
  3. Understanding financing methods
  4. Finding a lender
  5. Get Pre-Approved
  6. Determine your home search criteria
  7. Research and view homes
  8. Select a home
  9. Make an offer/negotiate, leave emotions out of it
  10. Sign a purchase and sale agreement
  11. Get inspections, Home inspection and any other inspections
  12. Apply for mortgage application
  13. Realtor/Broker will confirm a clean title
  14. Get home insurance
  15. Final walkthrough
  16. Closing, signing documents
  17. Documents recorded, keys are turned over to you

 

As with any part of the real estate process, if at any time you have any questions or concerns ask your realtor.  That is what they are there for, to provide you guidance that you can trust and believe in.

 

Do you have questions in the Seattle area, contact Tom Fine, tomfine@windermere.com or 206-434-6561

 

Tom's next blogs break down the 17 steps of purchasing a home.

 

Happy Home Hunting!

Posted on January 16, 2014 at 10:08 pm
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