I was reading the Sun Sentinel article about the Real Estate Market and in my opinion we will see some adjustments in the market.
Housing in 2016: No bubble, modest price increases
Home values didn't grow as fast in South Florida this year, but don't worry abouta housing hiccup in 2016.
"We are not going to regress," said John Tuccillo, chief economist for the Florida Realtors trade group. "There's not going to be a slump or a bubble burst. We have a nice, strong foundation."
Annual price gains in Broward and Palm Beach counties ranged from 3 to 9 percent for most of 2015, well below the 20 percent increases that were so common in 2013 and 2015
Modest price increases that don't get too far ahead of wage growth will help sustain the housing market next year and beyond, said Ken Johnson, a real estate economist and professor at Florida Atlantic University.
A recent survey by real estate website Zillow.com showed that some industry observers think bubble conditions exist in the tri-county South Florida region, as well as in other metro areas such as Los Angeles, Houston and Seattle.
But Zillow Chief Economist Svenja Gudell said in a statement "there's no real danger" of a national housing bust.
In a worst-case scenario, Johnson said, South Florida prices will fall flat in 2016, and homes will sit on the market longer.
Even so, "people would still be able to sell their homes," Johnson said. "It wouldn't be like it was in 2008 when you woke up and couldn't sell your home for any reason."
Here are three other predictions for the housing market in 2016:
More homes will hit the market. Analysts said the same thing a year ago, but it didn't happen. Buyers remained frustrated with a lack of choices, particularly in the $500,000-and-under price range. Real estate agents said owners were hesitant to test the market because they didn't think they could easily find another place.
But Jack McCabe, a Deerfield Beach housing consultant, said corporate and individual investors that bought homes after the housing crash and turned them into rentals will be ready to sell. In the condominium sector, more new buildings will be completed, though the bulk of the units won't be ready until 2017 and later.
He expects the increase in supply to flatten out prices and make the market more balanced between buyers and sellers.
"I think 2016 will still be a good year for real estate, but I definitely think we'll see some changes in the last half of the year," he said.
A rise in interest rates won't hurt home sales. The Federal Reserve announced this month that it was raising the federal funds rate. While that does have a ripple effect on all interest rates, it's not directly tied to an increase in fixed mortgage rates, Ryan Paton, president of Capitol Lending Group in Fort Lauderdale, told clients in a recent email.
"The increase was long anticipated, and it may even encourage homebuyers who had been waiting on the sidelines to enter the housing market now," Andrew Barbar, a Boca Raton broker and 2015 president of Florida Realtors, said in a statement.
Despite the increase, rates remain historically low, in the 4 percent range.
"I don't think buyers will be walking away from 4 1/2 or 4 3/4," said Jim Flood, regional manager for Supreme Lending in South Florida.
Renters will continue to feel squeezed.A scarcity of apartments across the region in recent years has led to low vacancies and escalating rents, giving landlords the upper hand. While more supply is coming, much of it is of the luxury variety, putting low- and middle-income residents at a decided disadvantage.
FAU's Johnson said renters who invest the money they would spend buying and maintaining a home can accumulate wealth on par with homeowners. Still, he advises renters to buy as soon as they can, even if that means paying a premium to get out of their leases early.
"You need to get creative so you have the ability to walk away from the lease because you found a home at the right price and at the terms you want," Johnson said.
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