Evan Vitale

Accounting Professional

Evan Vitale – 2016 Housing Market Forecast

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By Evan Vitale

Are you looking to buy or sell a home in 2016? If so, what will the market be like during the upcoming year? Will it be a buyer’s market with deals aplenty, or are the sellers in charge over the next 12 months?

As with any prediction story, there will always be two sides.

However, according to most housing experts:

Current homeowners should expect another good year of solid gains in housing prices. After the housing bust four years ago, prices have been moving steadily higher. Most are predicting another gain in the middle single digits, while there are some expectations that prices nationwide could be close to the all-time high reached a decade ago.

If you’re looking to sell your home, the market conditions should be good. Due to the historically low number of new and existing homes for sale, it will create more of a seller’s market this year.

While this might cause homeowner prices to rise, potential buyers are benefiting from an improving job market, continued low mortgage rates and easier credit. Note: fixed mortgage rates are probably not going to stay below 4% much longer in 2016, but they don’t appear to rise sharply either.

The Federal Housing Administration, which helps first-time buyers get mortgages, cut its fees last year and it may do so again soon as its finances continue to improve. This will allow more first-time home-buyers a better opportunity to get into a new home in 2016.

Where are the hot real estate markets in 2016?

According to Zillow.com, low unemployment, rising home appreciation and strong income growth, Denver will be the hottest residential real estate market in the United States this year.

Following Denver, according to Zillow, will be Seattle, Dallas-Fort Worth, Richmond, Virginia and Boise, Idaho.

Zillow predicts Denver homes will appreciate by 5% in 2016 and expects income to grow 1.1% along with an annual unemployment rate of 3.1%. Those three factors, says Zillow, make Denver the hottest real estate market this year.

Evan Vitale – China Real Estate Bubble Bursting

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Finally, the Chinese real estate market seems to be stalling. It’s been a long run.

For almost 20 years, increases have occurred in construction and real estate prices across all of China. But development is starting to come back to earth as housing starts have decreased by 25 percent from a year ago.

Some economists are saying that the bubble has burst, something that could have severe economic and political implications.

The Chinese government put a series of policies in play in order to try to tame the ever-rising market. For starters, they’ve placed punitive interest rates on mortgages for second homes and a ban on buying third homes. Plus, the central bank has kept short-term interest rates well above the rate of inflation.

Not only has there been a delay in new projects – existing projects are being completed at a reduced speed as well. This has led to a slowing in both steel and cement output as well as retail sales.

Chinese economists believe that this downturn in the real estate market will most likely lead to considerable increases in nonperforming loans.

However, there is no need to worry about a shutdown such as the one that occurred in the U.S. in 2008. More than half of the homes in China were purchased over five years ago and real estate prices have doubled in that same time-frame. And Chinese families have a tendency to save – putting almost half of their income into a savings account.

Households in China have 66 percent of their assets in their homes, a much larger percentage than that of the U.S.

Evan Vitale – London’s Real Estate is Going Crazy

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An apartment overlooking Hyde Park in London recently sold for $237 million, giving a glowing example of the craziness of London’s real estate market.

The city’s housing prices have skyrocketed 18% within the last year and it has both politicians and economists worried.

The apartment, which is speculated to have been sold to a foreign buyer, is still unfinished. It is approximately 16,000 square feet. 

Londoners cite foreign buyers as a reason for this rising market price, making ridiculous investments in a market that has a high demand.

London Vs. New York City

A new report shows that over $676 billion has been invested in London real estate. This is approximately four times the amount that has been invested in New York City.

London is desirable due to a bunch of reasons — it’s vibrant culture, a growing economy and business scene, and the variety of green spaces. One aspect that is often overlooked, however, is the timezone — one which is located between Asia and the US. 

Low interest rates and aggressive government incentives have also helped with the housing boom in London. 

Dangers 

The housing market in London is a bubble waiting to burst. Economists are considering raising interest rates later this year. Rates have not risen since July 2007. 

These rapid price gains raise the chances of future debt growth. The low interest rates are no longer necessary for the London housing market.