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.

This article was written by 

Posted on February 11, 2016 at 10:10 pm
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Contractor experience adds unmatched value in home-buying process

Realtors come from many different backgrounds—sales, IT, and consulting—to name a few. My experience as a former general contractor/builder is a huge advantage for my clients. Of all of the possible background for real estate sales, which experience brings the most to the client’s search, assessment, and negotiation process? I realize that I can’t be objective about this topic, but a former contractor’s knowledge of housing structure, materials, wear and tear, and renovation costs, are invaluable.  My background in construction has been a priceless bonus for all of my clients. Allow me to illustrate…


Imagine yourself as a homebuyer walking into a home that is for sale. As your agent, I look around and identify some things in the house that concern me; the exterior siding has moss growing on it, the railing is a little loose and penetrating the wall. I move the railing screw around and feel that the area is rotted. Then I start to wonder….what else is wrong? — is there anything else that is not taken care of by the owners? I see other items that prompt me to suggest to you that we move on and look at other houses.  If you loved the house, and all of its characteristics and layout, then I would let you know the problems that I saw.  During an intense inspection, we would see in total, all that was uncovered.


Scenario #2, the buyers that I represent are looking at a condo, and they love the view. I look around and make notes on my iPad. After a walk-through, I ask my clients what they think of the condo.  They like it. We look at the storage area—it smells moldy and musty. As we tour the mechanical room, we uncover a room that houses a sauna and a hot tub—both are decommissioned by the HOA (Homeowners Association.)  This is a HUGE red flag;  #1, the association has a moldy, smelling, storage area, and # 2 the hot tub and sauna are decommissioned by the HOA. This tells me that although significant dues are collected from each unit, the community facilities are not being maintained properly. What else is not being maintained? When we go outside, I see more items that concern me—the wooden soffits appear to have some deterioration issues. The exterior also needs attention, and my estimate is that this is a $250K improvement project.


Scenario #3, my buyers and I go to the next condo. It’s great! I mean…the view is fantastic! It has a great view of the water, but as I walk through the unit and into the hallway, I feel like a drunken sailor.  The floor in the condo is not level. After a complete tour, my opinion is that the unit is OK, but nothing to write home about…..but THE VIEW–did I mention the view?!  The place also has a pool and sauna, and is within walking distance of many local restaurants and shops. Later, I step into the hall to look for the mechanical room and meet a couple who live in the building. We talk briefly about the building, the maintenance, and some general comments they have about the place. They are very nice, and forthcoming, and I learn something about the condo board. It consists of residents that have been there for many years and they don’t like to spend money on maintenance or capital improvements, so the north side of the building is about eight years overdue for siding replacement. The decking around the pool also needs maintenance. The kind couple also inform me that one condo owner recently requested to make some changes to their unit — requiring board approval — and were turned down. What about that great view?!  A difficult HOA board is a potential deal-breaker — even if you inherit the property.


Scenario #4, my clients who are first-time buyers and newlyweds want to buy a rambler that just came on the market.  It is in a great part of town, and the yard is gorgeous.  I walk in and notice that the owners renovated it poorly. The floor plan was modified and it does not flow right.  In the basement, the drain/sewer was exposed and a temporary fix-it job was botched—someone tied into the wrong plumbing fittings.  What else did they do wrong? (I say to myself) I look in the attic and find evidence of a fire years ago and also find more signs of poor renovations and framing issues.  I analyze these items and feel there are too many issues to consider this house as a viable property.  My buyers really want the property, but I feel an obligation to explain all the issues that I see. Regardless, they feel that all the problems were things that they could fix. I appreciated their enthusiasm, and of course I would like to make the offer and sale, but I want to be honest with them about how much it would cost—it would take a deep pocketbook. They are so serious about the place and as much as I dislike being pessimist, I ask them to give me a few minutes to put together a rough estimate as to what it would take to do the repairs and make the place right. The total renovation and correction costs are enormous, and when I review the rough estimate with them, they realize that buying that home would be a mistake. That property sold for 10% over the listing price and I know the new buyers did not have someone with my experience in their corner.  I am sorry for them and others like them.


I could have sold these properties to my clients, but not with a clear conscience. I choose to create a long-term relationship with them and be the kind of agent that I would want for my own family. I can feel good about my service to clients when I work hard for their trust and confidence and provide them the information that they need. After all, it is probably the biggest ticket item they will ever purchase. Beyond making a sale, and a commission, I want to feel good about helping clients make good choices and build a solid future. Sound construction and renovation counsel is a customer-service bonus for my clients. How many real estate agents can offer this invaluable home-buyer service at no extra cost?


Tom Fine | Broker | Windermere Real Estate Capitol Hill

SRES and CNE Certified

Senior Real Estate Specialist and Certified Negotiation Expert



Posted on April 29, 2014 at 4:19 pm
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What Happened with Housing in January and What to Expect

    The beginning of February brings us with an incredible time for sellers, it is a sellers market with limited inventory and lower interest rates. Buyers are having a tough time with the limited inventory, that are stimulating multiple offers and offers going over 15% above listing price in some instances.
    This is discouraging for many buyers and I am encouraging my buyers to hang in there and be ready to jump as soon as we hear of a new listing that matches my clients requirements.  With the limited properties coming on, we are doing a lot of jumping.
    From what we can see, it appears this spring and summer will be heavy activity in the real estate market, heated up from the limited inventory over the last several months.
    Exciting times are coming and buyers should be patient and sellers should be getting their homes on the market to take advantage of the limited inventory, this should provide a better sale price now than this summer when more home flood the market. 
If you have any questions r or comments please contact me.  If you need assistance in the market wiht buying or selling please contact me.
To see what your home is worth, contact me for a CMA, (Comparable Market Analysis) 
Tom Fine
Fine Homes NW, Inc.
Windermere RE, Capitol Hill
206-434-6561  direct
Posted on February 11, 2014 at 3:02 am
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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
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Real Estate Sales Volume Numbers in Sales Up 17% in NW Region (Seattle and Surrounding Areas)


#'s going up and Down, see the text below for clarification on which numbers are doing what

Great News, the numbers are in for real estate sales in the Pacific NW for 2013.  The sales numbers compared to the year before are up 17% equating to 11,000 more properties.  Who wants to argue that the economy is doing worst or stagnant?  I am very happy with these numbers and look forward to a great 2014. These numbers state we re a nice increase and hopefully it will be a nice gradual increase. While we look at these numbers to determine the health of the area, other factors are contributing; unemployment numbers are lower than they have been in over 6 years to 6.6%.

Investors are spending a great deal of cash to buy foreclosures and turn them around in record time to get them on the market.

Other great news, we are seeing more homes coming onto the market for sale.


Contact me to discuss your investments.


Tom Fine

Windermere RE, Capitol Hill

Posted on January 25, 2014 at 5:01 am
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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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Incredible Madrona Home Ready for New Owners


What Great Views and a Wonderful Home!

Come to Madrona, Don't forget to explore the tunnel to the garage. There are s may great features of this home, from the beautiful renovated home, the kitchen, bathrooms, the millwork, the comfortable living spaces and the basement area that has the exposed basement walls that give this home the warm characteristics and shows so well.

Perched high above the street with serene lake and mountain views sits this completely renovated traditional home. This 1926 Craftsman unites formal and informal living spaces to create the perfect home. Leaded glass windows, crown moldings , Batchelder tile mantles and built ins abound. 

Updates include a generous kitchen, 3 baths, a powder room, electrical, roof, sewer, heating and plumbing. 





Enjoy the patios, greenhouse, hot tub and mature landscaping. A well lit stair meanders to the rocking chair porch and the front door. There are three garages, one of which has an underground passage lead-ing to the house. A fantastic find just minutes to Lake Washington, downtown and the eastside . 



As you enter the front door and you look tot he right (Which is East) the great views from the main floor mesmerize you and as you walk up the wonderful stairway, they views don't stop.  Exploret he house, it's fabulous form basement to the top floor and on the nicely  presented grounds.




Contact me today to see this wonderfull piece of Seattle History.  No modern home can compare to this!


Tom Fine

Fine Homes NW, Inc.

Windermere Real Estate


Posted on October 5, 2013 at 10:17 pm
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Tom Fine is Ready to Help You!

Hello family and friends,

  • Do you know a real estate agent who offers 24-hour service?

  • A Realtor that is not afraid to ask and negotiate about difficult issues?

  • One that represents his clients with exceptional professionalism?

  • Comes with a background in home construction and renovation?

  • Now you do!

This is an exciting time for me.  I have accepted position as a broker with Windermere Real Estate on Capitol Hill-specializing, but not limited to—homes and properties in the Seattle and greater Puget Sound area. The real estate business is a great fit for me, as you can imagine. The comprehensive skills that I have learned provide customers an exceptional benefit when buying or selling a home. I can provide a realistic view of your home, construction options, and value.
Are you planning on buying or selling a home or property in the next few months? Do you know of a friend or family member who is looking for a real estate agent? As a friend or family member, you are a key element to my success in the field. Please refer me to your family and friends, and I promise to represent them with integrity and get them the best deal, and results, possible. Contact me today with your real estate needs and referrals:
Tom Fine, Fine Homes, NW, Inc.
Windermere Real Estate
Cell 206-434-6561
Office  206-324-8900
Email   tomfine@windermere.com
Website:  http://tomfine.withwre.com/

Watch for my new Web site launch
Thank you for your time and consideration.

Tom Fine

Fine Homes, NW, Inc.

Copyright © 2013 Fine Homes NW, Inc. Windermere Real Estate, All rights reserved.
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Fine Homes NW, Inc. Windermere Real Estate

1112 – 19th Avenue East

Seattle, WA 98116

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Posted on September 9, 2013 at 7:21 am
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Jobs Report in! Good News. Save a Buck!

I love hearing good news, the job numbers are in and it's up 169,000.  Yeah! Unemployment in Washington down to 6.9% and in Seattle it's down to 5.5%.  We are on the slow track to recover and at least it's going in the right direction. Businesses are opening and expanding.

I know we are all smarter from what we have learned through for the last several years, it has made us smarter and wiser. Not to mention more cautious. I now know what my Grandfather, Joe meant by saying, save a buck! Back then it was a buck and today it's at least a $100's. My Grandfather lived a simple and comfortable life. He owned multiple rentals in downtown Detroit, Ouch! They where sold years ago for virtually nothing, yet it provided him and Grandma a comfortable income. Joe also had a tailor shop where he had pre-made suits and a great lay-away program.  Listen to this:  When one of his tenants needed to go to court because of non payment of rent or some other issue that he found out about, Joe had them come to his shop and he would outfit his tenant in a suit to look good. He said you always should look good when taking care of business.  He had such a big heart and great values.  Joe saw a lot in his life, from escaping the holocaust to the depression and living a long good life.  What do I take away form this?

How do I treat others?

Am I saving a buck?

What can I do for others?

How can I help the community?

What I put into this world, will it help and will anyone listen?


What does Joe (My Grandfather) have to do with the jobs numbers and unemployment? I think about how he helped put people in the right frame of mind when they where down and it gave his tenants courage and the ability to feel good about themselves so they can be a positive influence to their family and community.  Being a good contributor to society, working, paying taxes and being an asset to America instead of a liability.


I am looking forward to continuing good number reports as well as lower unemployment numbers.  While I save a buck.


Tom Fine

Fine Homes NW, Inc.

Serving Seattle and surrounding areas for your real estate needs




Posted on September 6, 2013 at 9:52 pm
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How to Sell your Home, Several Simple Steps to Increase the Value of you Home

This is scary, challenging and exciting all at the same time. The thought of selling your biggest investment.  Well being wise and realistic you'll do fine. I knw you're thinking you can do the FSBO, of course as a realtor I don't believe in FSBO (For Sale By Owner), here you have your biggest asset and you have a fulltime job and know you are thinking of taking on this huge endeavor, is this smart?  Do you know how much time it will take? Do you have experience in selling a home? Marketing a home, Interacting with potential buyers?  Do you know what to say and how to close the deal or negotiate?  What are these values worth?

The right realtor will make the cost of their services pay off, they will make you as much money as possible and will engage with potential buyers and buyers agents.  Well let's get down to why you are here.

Here are some steps to get your home prepared for selling for the maximum amount.

1. Curb Appeal, this is the first impressions a potential buyer will see your home, beside the pictures online.  Clean the yard, make the yard attractive, simple plants and bark in the beds can make your yard stand out from other homes for sale.

2. The first thing to do is to declutter your home, this means getting rid if all the excess items, possibly too many chairs in the living room, too much furniture is a turn off. The rooms should feel larger and by minimizing them, making the rooms look clean, larger this will give the rooms more volume. Clean your home, this means dusting, washing windows, this means deep cleaning and keep it clean, you never know when a potential buyer will want to see your home.

3.  Make necessary repairs, do a walk thru and look at everything and make a list, that is what a good inspector will do and you'll loose money on the house if there any issues. Once you have the list, prioritize the list and go over the list with your realtor, they can help make key judgments on what should be repaired or replaced.

4.  Prepare a list of what you like about the house and what repairs and improvements you've made on the property.

5.  How about another list of what shops, restaurants and other great places are around your home that buyers can associate with and can see the proximity of these places. Anything special like this: "Look thru Living room window to see the Space Needle", "Walk to the Waterfront", "Pike Place Market are within walking distance from the house".

6.  Once you hire a realtor to represent your home, they will provide a CMA, (Comparative Market Analysis) which will have comparative properties to provide you with a good idea of what your home is worth and what price range the home can sell for.  A realtor is here to provide you with details and information and it is your job top make the decision on price from t he information they have provided. It's important to try to leave the emotion out of this process and try to look at it as a business transaction. i know that's tough, but emotions get in the way of a realistic price. Emotions increase the price.  Keep your emotions out, be realistic what your home is worth, otherwise it's a waste of time to try to sell an overpriced home

7.  Tell your friends and neighbors that you are selling your home, word of mouth is an incredible power full source, utilize it. Spread the word.

With the right presentation and price and terms, it should sell fast in the right market.

Good luck on your home sale and I hope you do well.

Contact me to help you sell your home.


Tom Fine

Posted on August 29, 2013 at 9:30 am
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