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HOUSING MARKET FORECAST continued
The general consensus among housing analysts is that home prices in the U.S. will continue rising in 2016, at least in most U.S. cities. But the gains might not be as steep as what we have seen this year.
2. The biggest home-price gains will continue to be in the West.
In 2015, some of the biggest home-price gains occurred in the western half of the nation. Cities like Denver, Colorado and many in California experienced double- digit gains in property values. Denver and San Francisco, for example, both posted year-over-year gains above 10%.
These markets could experience some cooling in 2016, as mentioned above. But many housing analysts expect that the biggest home-price gains will continue to occur in these western markets.
In September 2015, the S&P/Case Shiller Home Price Index revealed continued appreciation across the country. But the biggest gains were reported in the west. According to David M. Blitzer, Chairman of the Index Committee:
“[The index] has risen at a 4% or higher annual rate since September 2012, well ahead of in ation. Most of the strength is focused on states west of the Mississippi. The three cities with the largest cumulative price increases since January 2000 are
all in California: Los Angeles (138%), San Francisco (116%) and San Diego (115%).”
3. Mortgage rates will rise later this year and into 2016.
This week (ending October 2), the average rate for a 30-year xed mortgage sank to 3.85%. The 30-year average has been hovering at or below 4% for most of this year. But what’s the forecast for 2016? According to some analysts, borrowing costs could begin to rise later this year and into 2016.
At the end of September 2015, Freddie Mac (the government-regulated buyer of mortgage loans) issued a housing market prediction for 2016. In it, the company’s chief economist forecast that the average rate for a 30-year xed home loan would gradually rise to 4.2% by the end of this year, and 5.1% by the end of 2016.
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