2016 housing market analyst predictions: Good year for homebuyers, bad for renters
- Mark Zandi, chief economist at Moody’s Analytics, identified the major, macroeconomic housing trends he predicts for 2016 in a Washington Post article. He said homeowners should continue to see gains, first-time homebuyers will have an easier time buying a home, rents will continue to rise, builders may still be slow to increase construction of single-family homes and taxpayers will bear less of the burden of the recession’s Fannie Mae and Freddie Mac loan debacles.
- Zandi said that, unlike the pre-bust housing bubble, house prices are on a more solid foundation, as they are supported by homeowner income. During the bubble period, lenders made it easy for buyers to get into homes they really couldn’t afford. Although frustrating for some buyers, lenders are more cautious these days.
- Conditions are ripe for a seller’s market, according to Zandi, and homebuyers should continue to benefit from an improving job market, low mortgage rates and a loosening of credit. Wages are also picking up, and, while mortgage rates will not stay below 4%, they won’t skyrocket either, Zandi noted.
Zandi said first-time homebuyers, who have been having a particularly hard time saving for a down payment in the face of rising home prices and rising rents, should benefit from the Federal Housing Administration’s reduction in fees.
The not-so-great news for renters, but a boon to landlords, according to Zandi, is that rents will continue to rise, as supply struggles to meet demand. Those groups putting pressure on the rental market are the millennials, who are finally finding jobs and moving out of their parents’ homes; former homeowners who have lost their homes in foreclosure; and empty-nesters who want to downsize.
Zandi added that multifamily property owners might see their best year ever this year. This market is so attractive, he said, that foreign investors are aggressively looking for entry.
Zandi's predictions of a better year for homebuyers signals good news for single-family builders, who have waited for an influx of first-time buyers to boost demand. However, despite the easing of some conditions for buyers, rising home prices and affordability concerns continue to plague the housing market. In its housing report last month, Zillow predicted the market will be defined by "deteriorating housing affordability" in 2016.
- WashingtonPost.com What’s ahead for the housing market in 2016
Follow Kim Slowey on Twitter