Tag: Economic Housing Outlook

What 1st-Time Home Buyers Need To Know Now

It’s normal to feel a little bit of stress when buying a house. Whether it’s financial worry or just the logistics of moving all of your belongings to a new home, there’s a lot to think about and plan for. This is especially true for first-time home buyers. That’s because first timers have never navigated their way through the home buying process before and may be feeling some added fear, confusion, and concern about handling the responsibilities of homeownership. So what should younger buyers be watching for if they’re planning on buying a home soon? Well, according to Fannie Mae’s chief economist, Doug Duncan, mortgage rates and inventory will be key to determining whether or not there are enough affordable, entry-level homes available for new buyers next year. “Demand from first-time buyers has increased with household formation and is outpacing supply, leading to significant price increases and affordability challenges for entry-level buyers,” Duncan said in Fannie Mae’s most recent Economic & Housing Outlook. “Home purchase affordability will be constrained further if the recent pickup in mortgage rates persists, which would present a downside risk to our forecast of housing and mortgage activity.” In other words, if mortgage rates continue rising and inventory remains low, first-time buyers should expect higher prices and more competition in the year ahead. More here.


Housing Gains Balanced On Wages, Prices

Last year, the housing market posted its best numbers since 2007. Still-favorable affordability conditions, led by low mortgage rates, resulted in a strong year for home sales. But with the Fed’s decision to raise interest rates and the continuing climb of home prices, there is increasing concern that housing affordability may become an issue for prospective home buyers in 2016. So how are things likely to play out? According to Fannie Mae’s most recent Economic & Housing Outlook, the Fed’s rate hike hasn’t had much of an impact yet, so wage growth and home prices are the most important factors to watch. “Despite our expectation of only a small rise in mortgage rates, home price and income dynamics should inhibit home purchase affordability,” Duncan said. “In addition, continued rent increases will hinder renters’ ability to save for down payments. Therefore, we believe the pace of improvement in total home sales should moderate to 4 percent in 2016.” Still, Duncan expects an increasing number of single-family housing starts this year, which may provide some relief in markets where low inventory is pushing prices upward. Also, continued gains in job security and household income – along with eased lending standards – could help balance the effects of higher home prices and allow more Americans to pursue their dreams of homeownership. More here.

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