2015 was a great year for both buyers and sellers. We started off with amazing interest rates for buyers and a decent inventory of homes for them to choose from. An array of loan programs were available for any buyer in any price range and foreclosures and short sale properties became less and less a market trend. It was not only good for buyers but sellers too! Due to the rates, loan programs, and less distressed homes available at discounted prices; competition was regained for owner-occupied homes. Not only have we seen a decrease in average days on market but also an increase of values compared to those of 2012-2014. All in all the market has fared well for all parties in 2015.
Here we are sitting in the final quarter of 2015 ready to bring in the New Year and what can we expect. I am a student of my industry, constantly studying market trends and buyer and seller habits and I truly believe we are headed for an amazing 2016, and here’s why. Rates are still at all-time lows. Maybe not as low as they were at the beginning of last year but nonetheless lower than they have been in a while. I do see a slight increase in interest rate percentages this year but nothing that would cause a housing slump. We actually need a bit of an increase because there are still many buyers still on the fence about purchasing and when the pendulum starts to swing, many of those will move forward with their home purchase in fear of losing their chance at the still yet amazing rates. The most difficult hurdle I see for 2016 buyers, is the lack of inventory to choose from. If you drive around town you can see there is a lot of construction in the residential sector but coming out of the past few years where building was slow if not inexistent, will our supply be enough to account for the demand?
The one thing buyers should understand is that the days of thinking overnight about that house you just fell in love with are gone. If you don’t act quick that home could be gone. Therefore before heading out on that house hunt, make sure you have all of your ducks in a row. This includes getting your pre-qualification letter from your lender to submit with a contract and if you are a cash purchaser make sure your banker has provided you with a proof of funds letter so that you are ready to go when the time comes. As these buyers consume this lower than average inventory, sellers are going to be put in a very good position. The less inventory available increases demand and as such demand increases so will their home values. First we will see less and less days on market (which really has started already), then multiple offer situations, then values to follow. With the increasing values of seller’s homes there are some things to keep in mind such as the appraisal process; When values increase it may be very difficult for an appraiser to justify the price to a lender if your buyer is getting a loan but there are a couple of things you can do to help. As you do when you list the home make sure that your home is show ready for that appraiser. Another good idea is to leave a list of improvements and the cost of those for the appraiser.
There are other trends and behaviors I have witnessed this year and I am sure will continue into next such as the increased web traffic on national websites including Trulia, Zillow, and Realtor.com. We have seen a continuous rise in the amount of time spent on these websites and in practice we see that many buyers are choosing to call or inquire based on the results. One warning to buyers, be sure you know all the facts. Although these websites are very user-friendly sometimes the information may not be as accurate as you might think. Your local agent will be able to provide statistical information for property values and be able to guide you in the right direction on who to call for other information including school districts, crime reports, etc. I’ve got a warning for sellers also, if your property is listed make sure that your agent has submitted the correct information including bedrooms, bathrooms, square footage and most importantly the pictures. If buyers are searching for houses in your area and your pictures were taken from inside a speeding vehicle or even worse there are only a couple of pictures, it may be very easy for them to skip your home and move onto the one that they can see themselves in.
We are in the beginning stages of a great turnaround in our market. Locally we see both the residential and commercial sectors are thriving. New construction going in, mergers and acquisitions, even major landmarks being restored to their once known beauty. Entrepreneurship in small business is also growing. It seems around every corner there is a new restaurant, new clothing store, furniture stores and salons. I look forward to the coming years in Real Estate and I look forward to seeing you in the New Year.