It’s almost time for a new year to begin, so this week we’ll look at what’s ahead for 2016. Homes should reach levels not seen since 2006 (before the recession). New construction and Millennials jumping into the housing market are two key drivers of the projected increase. Construction spending climbed to an 8-year high in October. Finally we’ll look at how the Fed’s projected interest rate increase has affected mortgage rates. The Fed meets on December 16 and many experts expect a rate increase.
We’ll talk more about that in a second, but first let’s take a quick tour of how Tampa area real estate (Hillsborough County) performed in November of 2015. Next week, we’ll look at Pasco County. If you have any specific questions about the area or are looking to buy, sell or invest in the Tampa area we’d love to talk with you. Please get in touch.
November Market Statistics – Hillsborough County
“Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market,” says Jonathan Smoke, chief economist for realtor.com. “The improvements we’ve seen over the last few years have enabled a recovery in the existing home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market.”
Who Are the 2016 Homebuyers?
- Older millennials (25-34 years old)
- Younger gen X’ers (35-44 years old)
- Retirees (65-74 years old)
Millennials: They are expected make up the largest demographic of homebuyers in 2016, having represented 30 percent of the existing home market. Driven by increasing income, millennials will seek out homes that meet the needs of their growing families-putting the most weight on the safety of the neighborhood and the quality of the home. Commute time and a preference for older homes have these buyers looking in city-centers and closer-in suburbs.
The Commerce Department said Tuesday that construction spending rose 1 percent in October from the previous month to a seasonally adjusted annual rate of more than $1.1 trillion. That’s the highest level since December 2007 when the Great Recession began. More Americans are buying new homes or renting apartments, driving greater residential development. And federal, state and local governments, spurred partly by greater tax revenue, are building more roads and schools. Construction spending has increased 13 percent in the past 12 months.
The U.S. economy added 211,000 jobs in November, after gaining an upwardly revised 298,000 jobs in October, according to the Bureau of Labor Statistics. The unemployment rate remained at 5%. Was this latest jobs report enough to persuade the Fed to increase the federal funds rate on Dec. 16? Consensus points to “yes.” “I think that they probably will raise rates a quarter-point next week,” says Jeff DerGurahian, executive vice president of capital markets at loanDepot in Foothill Ranch, California.