SI Real Estate Tampa Bay is excited to see what 2016 has in store for the housing market.
We were pleasantly surprised with the uptick in real estate activity in 2015. Of course everyone is turning the page to the New Year, and consumers are contemplating what to expect in the housing market. The professionals here at SI Real Estate fully believe this year will be an even better one, eclipsing the fantastic turn-around last year that took place throughout the US. Some of the key reasons for this that we are going to talk about: interest rates/lending, inventory, and pricing.
Interest rates have been historically low since the recession began. They are still extremely attractive, even with the negligible increase last month. Yes there should be at least a couple more increases in 2016, but they will likely be small bumps like the quarter point increase in December. This is not expected to affect the attitude of home buyers and will actually help strengthen the economy. Lending benchmarks became stricter after the housing market burst, but they are finally relaxing a tad (as we feel they should). The high benchmarks that needed to be met effectively ruled out a ton of potential home-owners due to blemishes, mostly stemming from the economic crash. Credit scores that were below the extremely high standards of lenders was another issue that plagued parties trying to buy real estate. Luckily, Fannie Mae and Freddie Mac have been working to lower their acceptable threshold for credit scores, though they are still historically high overall.
Available inventory has been thin for the past 400+ days here locally in Tampa, with many major cities echoing the same trends. This is for both new home sales and resale homes. Prices have been trending up due to the low inventory we are seeing. Now that home values have risen to a comfortable level, more listings are coming into the market place as sellers can take advantage. Here in Tampa, there is still only a 4 month supply of homes available, well below the 6 month target for the housing market. We expect low inventory numbers to remain through the first half of this year, as more buyers come to look for Florida properties to purchase.
Housing prices are up across the board including new homes, resales, and rental prices. Builders have been steadily raising their prices over the last 12 plus months. We have seen new pricing sheets released by some builders for 2016, all of which reflect increases. This trend makes a lot of sense considering the inventory shortages and the surge of new home sales locally and nationally. Home builders see this as an opportunity to increase profits, as they should. Our professional experiences in the industry reflects price increases in every sector of the market. Sellers can expect a higher price point for their homes and are not in a hurry to take the first offer they receive. Buyers are willing and able to pay more for a home than in years past. Investors are paying more this year for assets they could have picked up for significantly less in 2012-2014. Since investors are having to pay more for properties they turn around and rent, they have been raising rent prices accordingly. Pricing trends are not artificially high and we expect continued growth throughout 2016.
As we all recognize, the housing market has recovered and the number of potential buyers and sellers participating is rising every day. The MLS is populated with new listings and transactions, which is fantastic to see. Although inventory is lower than we would like, and prices are rising… the market is very attractive for any type of participant. Projection: Real estate expectations will result in a stellar year nationally and in the Tampa Bay area as there is notable momentum carrying through from 2015! 6 real estate economists from Inman.com agree with our prediction too. Their latest article published 2/2/2016 echoes the same sentiments that we do- 2016 will be another great year for the housing market! If you want to read their article and predictions, go here: http://www.inman.com/2016/02/02/6-economists-forecast-2016-housing-market/