Image: Spring housing market
The anticipation surrounding the spring real estate market is electric. After a year of growth and recovery, industry insiders are filled with excitement for what lies ahead. In fact, this spring might just be the best the market has seen in over a decade. But what is driving this overwhelming confidence? What makes this spring so special? Let's delve into what we can expect from the upcoming months.
What To Expect From The Spring Real Estate Market
Spring Housing Market Activity
In 2015, the housing market showed promising signs of bouncing back from the Great Recession. Home appreciation returned equity to places that had been struggling for nearly a decade. Interest rates made homeownership more accessible, and real estate investment strategies gained traction. The housing market was buzzing with positive indicators. And now, it looks like the momentum from last year is set to spill over into 2016.
According to the 2016 Mid-Atlantic Housing Market Survey of MRIS Real Estate Professionals, the spring selling season is poised to benefit greatly from the momentum built up in the previous months. Optimism is at an all-time high. What's more, the number of stable or growing markets has nearly doubled compared to last year. This has led experts to predict that this spring will surpass the success of its predecessor.
A significant reason behind this consensus is the influx of millennial homebuyers. While first-time buyers were not as prevalent as expected last year, it seems that the tide is turning. According to Freddie Mac, "the nation's 86 million millennials, plus America's rapidly growing immigrant communities, are expected to produce about 1.2 million new households a year for the next ten years." So don't be surprised if this year's spring real estate market sees a surge in first-time homebuyer activity.
Interest Rates Will Drive Homeownership
Respondents in the MRIS survey believe that an imminent interest rate hike will spur more people to finally take the plunge and buy a home this spring. In fact, low interest rates have already motivated homebuyers to act in the face of low inventory levels, rapidly appreciating markets, and fierce competition.
"Consumers are heading into the spring home buying season with a positive outlook," says Steve Udelson, president of Owners.com. Freddie Mac's chief economist, Sean Becketti, echoes this sentiment, suggesting that "housing markets are poised for their best year in a decade." Their latest forecast predicts that total home sales, housing starts, and home prices will reach their highest levels since 2006.
It's safe to say that the sub-four percent interest rate will continue to promote homeownership. Freddie Mac's monthly outlook expects the 30-year mortgage rate to remain appealing throughout the spring home buying season, staying below 4 percent in the latter half of the year. However, what might be more important to homebuyers is the threat of an increase in interest rates.
Investor Michael Roat believes that rising interest rates will push fence-sitter buyers into the market. Once rates start to climb, the "time to buy is now" argument will be more compelling than ever before. This pent-up demand will lead to increased home sales, prices, and housing starts, propelling the residential real estate recovery forward.
Positive Factors Continue To Grow
While the spring real estate market builds on the momentum of last year, several other elements are expected to contribute to its success in the coming months. Let's explore a few of these positive factors:
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Job Market: The Bureau of Labor Statistics reports sustainable wage growth and steady job growth, making the labor force the strongest it has been since the turn of the century. With confidence rising among millennials and first-time homebuyers, we can expect an increase in home sales.
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More First-Time Homebuyers: With one of the strongest job markets in 16 years, millennials and first-time buyers are in a better position than ever to purchase a home this spring. Coupled with today's attractive interest rates, this bodes well for increased housing activity.
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Rising Rent: In certain cities, rents are skyrocketing, preventing many individuals from saving money. However, this trend might actually push those who can afford it to transition from renting to homeownership sooner rather than later. Building equity becomes more appealing than paying someone else's mortgage in the long run.
The stage is set for a bustling spring real estate market, and many are eagerly waiting to see if it lives up to expectations. The combination of millennial homebuyers, favorable interest rates, and other positive factors creates a recipe for increased activity and growth in the real estate market. Get ready for an exciting season of real estate transactions!
