2016 Real Estate Prediction

Posted by Larry DeBerry on Sunday, November 29th, 2015 at 10:46am.

I do not have a "crystal ball" when it comes to predicting where our real estate market will go in 2016 but I think I can make some educated guesses. First, let talk about what is happening now in the market. Prices in the Collin County-North Dallas area have seen 10% increases plus in some areas. Inventory of homes for sale has remained low and this is causing the price increases. Less homes to purchase, high demand and the market dynamics work as they always do, prices go up. Next, interest rates have been subdued which means they are favorable. This is the market that exist today. So what's next?

2016 will remain a very tight market for at least the first half of the year. It takes time to build inventory. If we don't build inventory of homes for people to purchase then home prices will remain high. We definitely need more inventory for the market to balance. This is the biggest issue we will be facing going into next year. Where will mortgage rates go? This is a tough question since the Fed has been keeping rates artificially low for quite sometime. Many feel that there should be a rate increase of a small amount. Predictions are that it will be in December or later next year. Most all agree it will be a small increase if any.

The north Texas economy has been booming and that brings in more people to our area. Jobs is what drives the real estate market and I don't foresee a major issue in this area anytime soon. However, Texas is tied to energy and low oil prices could continue to effect certain parts of the state like Houston. It will have a mild effect here in the metroplex but not substantial. My concern is more with the U.S. economy as a whole. There are so many dynamics that could cause a rapid change in any prediction it is hard to imagine what could upset the apple cart. First, our U. S. debt is an issue, the zero or almost zero interest rate the Fed has kept for a long period of time has caused companies to take risks that could come back to haunt them in the end. So could there be a change in 2016 with our national economy, I think it is a possibility and it could come to haunt us in the first half of 2016. Next, terrorism is something no one can predict. However, it can have an effect on our economy and we should all be vigilant to keep an eye out for signs of this within our area. It could interrupt our economy but it won't stop it. 

Sorry for some of the potential negative outlook but we must be aware that the economy in North Texas is also part of a larger economy which could effect our own. My prediction is that real estate will remain very active through the first quarter of next year and after that there could be a softening because of interest rates or just because it is a Presidential election year. Not sure what that has to do with anything but it does seem to have an effect in the market. My team continues to help over 150 families each and every year with their real estate needs and we don't see a change in that scenario at this time. So we remain very positive about the real estate market in north Texas overall.

 

I hope I go it right!!

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