Planning to buy or sell a house this year? Read this first.
While no one can predict at the beginning of the year what will happen by the end of the year, some experts have researched the housing market and come to these conclusions…
You need to be patient in 2016
For most of last year, it took 46 days to close on a home loan. That’s already a long and stressful time for homebuyers, but it’s only going to get longer this year.
Starting last November, that number jumped to 49 days, according to mortgage software company EllieMae. The reason? It might be the government’s fault.
“The increase could be due to lenders adjusting to the new RESPA-TILA (Know Before You Owe) regulations,” EllieMae says.
What’s that? It’s an act from the Consumer Financial protection Bureau that went into effect last October. You can read about RESPA-TILA at the CFFB’s website, but it won’t make much sense if you’re not a mortgage professional. To sum up its 1,888 pages, it requires more disclosure to help borrowers understand all the fees they face in getting a home loan.
Until everyone in the mortgage business gets a handle on this new act, expect a few more days before you can get the keys to your new home.
It might get cheaper to buy a home in 2016
“More lenders reported expectations to ease rather than tighten mortgage credit standards,” reports Fannie Mae, “which may help mitigate some of the decline of housing affordability moving into 2016.”
That’s a very business-like way of saying: If your credit score is less than stellar, you still might be able to score a good deal on a home loan.
Lenders aren’t doing this out of altruism. Fannie Mae says the mortgage business is getting competitive. In fact, its research shows, “Lenders’ profit margin outlook has gradually trended down.” Their bad news is your good rates.
In addition, home appreciation is slowing.
“The number of homes nationwide gaining value on a monthly basis are expected to fall by 12 percent over the next 10 months as the housing recovery slows,” reports research firm Weiss Analytics.
That doesn’t mean homes aren’t going up in value. “Just over half of America’s homes will continue to appreciate by October 2016,” Weiss says. However, it means the trend is slowing, which is good news for buyers – although not for sellers.
The market might get crowded in 2016
During and right after the Great Recession, many experts wondered if millennials really want to buy homes. The generation that laughs at landlines and shops for everything online might want to rent forever and forgo the hassles of home ownership.
New research shows otherwise.
“Nearly all young renters eventually want to buy a home, and a convincing majority still views homeownership as part of their American Dream,” says the National Association of Realtors.
Specifically, 94 percent of renters 34 years old or younger want to move into their own place – and 68 percent of those “believe that it’s a good time to buy a home.”
Will 2016 be the year younger buyers flood the market? If so, good news for sellers – and not so good for other buyers.
Cutting-edge help is available
One prediction that’s easy to make for 2016: Consolidated Credit will continue to offer advice for homebuyers and homeowners – from webinars to interactive calculators. Check out Consolidated Credit’s Housing Counseling section for details.