Real Estate Outlook in 2016 - Advantage Appraisals (2024)

20 Jan Real Estate Outlook in 2016

So what is in store for real estate in 2016? The surrounding markets were active in 2015 with prices at the very least stable if not trending upward at some point during year. Of course every local neighborhood varied in price appreciation. So, will prices continue to rise? Will increased interest rates slow the market down?…..

Below is my brief outlook of some variables to watch in 2016. I also shared the opinions of some top realtors/brokers about their respected markets: Sean Ramsey, Casey Spencer and Mimi Simmons.

Here are some factors to watch:
1) Interest Rates- Since the fed raised the federal funds rate, the obvious pressing question is how it will impact mortgage rates into 2016? So far not much as seemingly mortgage rates already priced in the increase. In fact, most recent data shows current rates at close to 7 month lows. It seems 25 basis points won’t cause much of a dent in the market at this time.
While the fed states they will continue to raise the federal funds rate through 2016, I believe this is more of a blanket statement to suggest that our overall economy is recovering while data and many economists believe the contrary. I personally don’t subscribe to the continued fed funds rate hike in 2016 and believe they’ll hover in the current range for a while.

2) Buyer Demand- Will the threat of an interest rate hike motivate some complacent buyers? I think to a degree, yes. This extra motivation may cause the hesitant buyers who have been on the sideline for whatever reason to enter the market soon. I’m anticipating an active spring given the current conditions. Looking further this year, buyer demand may drop off during the fall season.

3) Price Stagnation- I feel many local neighborhoods have leveled and that a significant upward trend to be unlikely. If there is an up tick in prices, it would likely be seasonal and not long standing. The days on market has increased at certain price points and sellers pricing their home correctly is imperative. Buyers are more educated than ever and most won’t over pay for a home. The only caveat is if there is little to to no inventory in a neighborhood with high demand which will cause bidding wars.

Below is the outlook from local real estate professionals, Sean Ramsey, Casey Spencer and Mimi Simmons. Each has given an overview of what they are anticipating in their regions.

Regarding Sacramento county, Sean Ramsey states, “It looks like there will be a continuation of low real estate inventory in the Sacramento area for at least the first half of 2016. The housing inventory will gradually increase with a noticeable affect after the 2^nd half of the year as unsold inventory will start to sit on the market because the lack of affordable housing from skyrocketing prices and higher interest rates. Rents will remain strong and likely increase, and investor money will continue to flow towards single family and multifamily rental units. The end of 2016 will show an uptick in foreclosure starts as the real estate market starts to correct from lack of buyers. Foreign money will likely continue to flow into California real estate (at a slower pace) as the economies of the world have continued uncertainty. I expect price stagnation at best for 2016 with signs of softening by the end of the year.”

Regarding Placer county (foothills region), Casey Spencer states,“Buyers, the loan process is more complex than it was in the past. Get ready! Then, watch for the traditional “pop” of new listings beginning in March. Sellers, beware of overpricing; headlines and articles about a seller’s market are exaggerated, particularly in the Placer County foothills. The average time to sell a home in the 500K to 700K price range is over 60 days, definitely not a seller’s market. And over 800K, at any point in time there could be around 24 -30 homes for sale in the foothills… But over the past year, only one sold each month. If you want to actually sell in this price range, prepare to wait a long time, but also plan to be ultra competitive in your pricing.”

Regarding Nevada county, Mimi Simmons states, “The correction of the real estate market has taken place…our prices have recovered County wide by 55% (NCAOR 2015 Statistics) and we are moving into a stable market. I anticipate prices to stay close to last year’s price or a slight increase and the greatest demand will be for one story homes under $500,000 and affordable First Time Buyer homes. Nevada County is still one of the best communities in California to live in….”

I hope this gives an overview of some factors to watch in 2016 from not only myself but some top real estate professionals in the region. Any thoughts or comments?

Bryan Lynch
Certified Real Estate Appraiser
Office: 530-878-1688

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use. This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.