2016 Economic & Housing Forecast

The National Economic Forecast

 

1.The U.S. will continue to expand with real GDP growth of 2.3% in 2016.

Although a positive number, the forecasted rate of growth suggests that we will be modestly underperforming in 2016.  On a positive note, oil prices are likely to remain well below long-term averages, which puts more money into consumers’ pockets in terms of disposable incomes.  However, I believe that consumers are likely to continue to save rather than spend which will constrain growth.  That said, there is certainly no recession on the horizon – at least not yet – and a strong dollar will act as a bit of an anchor.

2.Employment will continue to expand but the rate of growth will slow. Look for an increase of 1.6% in 2016.

We are rapidly approaching full employment (generally considered to be when the unemployment rate drops below 5 percent).  As such, growth in employment has to be driven more by population growth rather than a return to employment. 2015 saw an average of around 210,000 jobs created per month and I believe that this is likely to slow to an average monthly gain of 190,000 new jobs.

3.The U.S. unemployment rate will continue to drop and end 2016 at 4.8%.

As mentioned above, we are heading toward full employment and, as such, the national unemployment rate cannot trend much lower.  That said, the less acknowledged U-6 rate (which includes those working part-time and those marginally attached to the workforce) will remain elevated at around 8%, signifying that there is still some slack in the economy and room for the rate to drop a little further.

4.Inflation will remain in check with the Consumer Price Index at 1.9%.

The Federal Reserve has begun the long-awaited tightening of monetary policy and we will likely see the Fed Funds Rate continue to move higher over the next two years. Inflation has yet to respond to the low unemployment rate, but it will.   

The core rate of inflation should remain in check and the overall rate could stay below long-term averages as a function of stubbornly low energy costs. Should we see a shift in OPEC’s position relative to oil supply, the overall rate of inflation could rise more rapidly.  Oil prices, therefore, will remain in focus during 2016.

 

The National Housing Market Forecast

 

5.Mortgage rates will rise, but we will still end 2016 with the average 30-year fixed rate below 5%.

I am taking the Fed at its word when it says that monetary tightening in 2016 will be gradual and heavily data dependent. Accordingly, I expect only a modest uptick in long-term rates in 2016. Furthermore, as long as the Federal Reserve continues to reinvest the dividends that it is receiving from their bond holdings – which is highly likely – the yield on the key 10-year treasury will remain low and hold mortgage rates in check. This is only likely to change after the general election, therefore suggesting that rates will remain very attractive relative to their long-term averages.

6.Credit Quality – which had been remarkably stringent – will relax a little.

Access to credit, specifically mortgage instruments, has not been easy for many would-be homebuyers but that is set to change.  I believe that we will see some improvement, specifically for borrowers with “near-prime” credit. This will be of some assistance to first-time buyers; however, credit quality will still be higher than it needs to be.

7.Existing home sales will rise modestly to an annual rate of 5.53 million units with existing home prices up by 4.7%.

I anticipate that we will see some improvement in overall transactional velocities in 2016, but unfortunately, demand will still exceed supply. Prices will continue to rise, but at a more constrained pace than seen over the past few years. This will be a function of modestly rising interest rates as well as slightly improving levels of inventory. I anticipate that we will see more listings come online as more households return to positions of positive equity in their homes.

8.New home sales will jump and be one of the biggest stories for 2016.  Look for a 23% increase in sales and prices rising by 3.4%.

I believe that builders will start to build to the entry-level buyer, filling a huge void.  Additionally, I see the total number of new home starts increase quite dramatically in 2016 as banks start to ease lending and builders start to believe that the downward trend in homeownership has come to an end.  This will help to absorb some of the pent-up demand currently in the market.

9.Foreclosures will continue to trend down to “pre-bubble” averages.

Any story regarding foreclosures will be a non-story as the rate will continue to trend down toward historic averages. However, we will see the occasional uptick as banks work their way through their existing inventory of foreclosed homes. Move along.  There’s nothing to see here.

10.The Millennials will start to enter the market.

There are several substantial reasons to expect an increase in Millennial buyers. Firstly, early Millennials are getting older and starting to settle down, and even with modestly higher mortgage rates, rents are likely to continue to trend upward, and this will pull many into homeownership.

Secondly, more favorable mortgage insurance premiums, additional supply from downsizing boomers, and growing confidence in the housing market will lead to palpable growth in demand from this important – and substantial – demographic.

To conclude, it appears to me that 2016 will be a year of few surprises – at least until the general election! Because it is an election year, I do not expect to see any significant governmental moves that would have major impacts on the U.S. economy or the housing market.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K. 

#YourStoryIsOurStory: More to Come

In July, 2015 we launched our #YourStoryIsOurStory campaign to showcase some of the remarkable stories you, our friends and clients, shared with us about your remarkable real estate journeys. If you missed any of these amazing stories, go back and take a peek at some of the heartwarming experiences our real estate agents and their clients had together. We are also excited to share many more moments in the year to come. If you have a story to share, please contact us at friend @ Windermere dot com.

 

#YourStoryIsOurStory: When selling the family home is like saying goodbye to a member of your family

Homes hold some of our most sacred memories. Nancy Chapin helps her clients pass along the torch to the next family.

"When people hand me the keys at the end of a conversation, I know it's not about the keys, it's not even about the house. It's about the legacy. It's about the history. It's about passing on a life to the next person, the next family, the next generation."

 

#YourStoryIsOurStory: A Shared Homebuying Journey

Windermere agent Gina Dhom has a methodology for helping her clients; she conducts an interview to help them identify their dream home goals. At first Chelsea and Brad were unsure of what they wanted, but with Gina's guidance they were able to pin point exactly what they needed, enabling them to locate the perfect home to make their own. 

 

 

#YourStoryIsOurStory: The Best is Yet to Come

When Patrick and Kat went to close on their first home together, he had a surprise up his sleeve. Patrick had enlisted the help of their Windermere Real Estate agent, Becky Ruark, to help him propose! Now they’re making their house a home with their newest addition.  

 

#YourStoryIsOurStory: Finding the Right Home for the Right Time

When looking for a real estate agent, it’s important to work with someone who really understands where you are in life, and can help you find the right home for your circumstances. Julie Huff has worked with Doug and Alyson through three different moves. From Doug’s bachelor pad to their first family home, and most recently, a new spot for their expanding family. After sharing so much together through the years, Julie and her clients have built a relationship that goes well beyond a single transaction. It’s a relationship for life.  

 

#YourStoryIsOurStory: A Unique Challenge

Every family has unique needs to fulfill when searching for their forever home. But 3,000 action figures is more unique than most. See how the Stevens family, and Windermere agent Marguerite Giguere, found the perfect home.

 

Throughout the year we will be posting some of our favorite #YourStoryIsOurStory videos, photos, and blog posts. Please take a minute to share your experiences, and follow #YourStoryIsOurStory on our blogFacebookTwitterInstagramYouTube, and Pinterest pages.

 

Practical Resolutions: Deciding to Sell (Part IV)

Choosing to put your house on the market is rarely easy, but if you must sell to move onto the next phase of your life, then you want to make sure your house is purchase-ready to get the most out of your investment. If you aren’t sure if you are ready to sell, you can always consider becoming a landlord or finding a property manager to handle tenants. But if you have decided to put your house on the market, it is time to let go of sentimentality and start thinking of it as a house again--not your home. Here are some tips for getting your house ready to sell and placing it on the market:

Do an audit: Go through the house, making notes of any projects that need to be completed, and anything that needs to be replaced, repainted or repaired. Here is a good checklist to get you started.  If you are unsure about any major problems, you may want to hire an inspector to look at your home prior to putting it on the market so you can fix all issues and avoid getting stuck in heavy negotiations.

Start with a blank canvas: Look at your home from the perspective of a potential buyer. You will want to neutralize your space so anyone interested in the house can see its full potential. Keep in mind that you may love your red wall, wall-to-wall carpet or lavish art, but others may find it hard to see beyond the decorations to imagine their own taste in the house. Neutralizing the space can be as easy as painting the walls a soft white, paring down possessions or scaling back on updates. Once your home is turn-key with the basics, start to think about the updates that will make the most difference in your return on investment.

Get the most bang for your buck: If you are considering upgrades to increase the value of your home, stick to projects that will make the most sense, such as increasing the curb appeal by re-painting or replacing an outdated front door and upgrading the landscaping with easy-to-maintain plants and pathways. The first impression your home makes on a buyer is key to selling your home quickly.  If your appliances are out-of-date, you may want to consider upgrading to energy-efficient models, which will appeal to a wider set of buyers. Avoid laying down new carpet; if the carpet needs replacing, consider wood flooring, as more people are replacing carpets with hardwood these days. Also keep in mind that your aesthetic will likely be different than those looking at your home, so avoid updates to the kitchen and bathroom that may offend the next homeowner. They will consider the need to replace these as a part of their offer. For more ideas on projects that bring a return, go here.

Find a listing agent: Once you are ready to put your home on the market, find a listing agent you trust will promote your home and bring the most return. Interview a number of agents to learn about their methods of marketing your home to other agents and potential buyers. They should be knowledgeable about the area, the market, comparable listings, staging and marketing techniques that will work best for you.  Look at potential agents’ past listings to see the techniques they employ, the photographs and language they use to market the homes, how long homes have been on market and what their listings look like.

Price your home to sell: Pricing your house right the first time will help it sell faster. The great news is there are plenty of buyers looking to purchase homes right now, and this trend should continue. The concern for many homeowners ready to sell is that their expectations for the selling price of the home will not necessarily be met. Increase your chances of getting your home off the market fast by working with your listing agent to price your home right. Your listing agent will factor in a number of considerations when helping you determine the best price for your home, including comparable homes that have sold in the area or similar locations, the type of home, neighborhood, condition, etc.

Staging: Now that you have gotten through most of the process for putting your home on the market, look at your home through fresh eyes. Staging your home is a fine balance between making your home inviting and setting a canvas for the next homeowner to envision the space with their stuff and to fit their life. Your home should look inhabited but clean, uncluttered but not sterile. Whether you work with a stager or do most of the set up yourself, you will have to get rid of the clutter and pare down all your belongings to the essential.


  • Thin out your closets; full closets look small.

  • Remove all personal items, photographs, trophies and excessive collections so prospective buyers can envision the home as theirs.

  • Pare down all your belongings to keep your home efficient and cleaning easy.

  • Pay attention to the details; you want your home to be welcoming in every way.


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Putting your home on the market can be stressful, but you can minimize stress by following these tips and other ideas for getting your home ready to sell. The better prepared you are prior to listing your home, the easier it will be to sell to prospective buyers. In the end, realistic expectations about how long it will take to prepare your home to go to market, what renovations will get you the best return, and what is the right price to motivate buyers will help your home sell quickly, saving you money in the long run.

 

What are your home-related resolutions for 2016? How are you doing on reaching your goals?

This is the last post in our four-part home resolution series. Read the previous posts on setting and sticking to resolutions ,making your house a home and buying a home.

Practical Resolutions: Preparing to Buy (Part III)

 

If you are ready to make the move towards purchasing your first home or upgrading to a new home, there are some considerations you should keep in mind to make the process easier. The housing inventory is up in some markets with the start of the new year, giving you more options. Whether you are just starting to save for your future home or you are ready to start searching, here are some tips you may find useful:

Assess your financial situation: If you have just started thinking about purchasing a home, now is a good time to do some research to see how close you are to accomplishing this dream. Check your credit score, assess your debt, and make a plan for paying down your credit cards and loans. Look at homes in your area of interest to gauge the general market value of those with features you want, and use a mortgage calculator to estimate what the down payment, monthly mortgage payment and property taxes will be.  Now that you know where you are starting from, you can begin (or continue) the process.

Ready, set, save: With your estimated home costs in hand, you can determine what amount you need to save before you can make a purchase. There are some great online and mobile tools to help you create and track your monthly budget so you can maximize your savings every month; mint.com is a great option. If you already have enough savings for a down payment, make sure your monthly income can support your future mortgage payments by saving the difference in expenses for a period of time.

Create a plan: Before you start shopping for your home, be sure to have a plan. You probably already have an idea of what you are looking for, but you can make your search easier by creating a list of what features are necessary and desired for your home. We all have priorities for our homes, be it location, size, style, number of rooms, amenities or countless other features, so make sure you know what you are looking for and what you can’t live without. If you have a deadline for moving, keep it front-of-mind as you go through the process.

Find an agent: Once you (and your partner and your children) know what you are looking for in your home, find a real estate agent that can help you find the right place for you. Selecting an agent is a personal process, as well as financial relationship. If you have friends or family that have worked with an agent for their own real estate needs, ask for referrals. If you don’t know an agent yet, you can find an office local to the area where you are interested in buying, and interview brokers. Keep in mind you will be spending a lot of time with your agent, so you need to feel confident he or she understands your needs; the deal-breakers, wish list, budget and timeline. A good agent will work with you in refining these to reflect the reality of the market, and guide you through the entire process from pre-approval, home searching, closing and resources, to get you into your new home.

Pre-approval: If you already have a real estate agent, they can help you find a lending officer. You can also work with your bank of choice to find a loan that works for your financial situation and start the approval process. The amount the bank is willing to loan you will determine the top-cost of the home you can purchase.

Purchasing Process: Your agent will be able to guide you through the purchasing process, from pre-approval, to purchase and sale agreement, to inspection, financing and closing. If this is your first home, keep in mind there are some factors that affect the purchase of your home. If you are looking at a short sale, a foreclosure or bank owned home, the process will take longer than a traditional home sale from the owner or developer of the property. Be prepared to work with your broker heavily during closing, as the negotiating process is a critical aspect of getting the home you want for the best price. Your agent can also offer you tips to avoid hiccups during your financing process, such as avoiding any major purchases until after your home has closed; even furniture purchases for your new home can create financing issues. To learn more information about the home-purchasing process, go here.

Setting up a home: Once you have closed on your home purchase and are ready to start making your new home yours, create another checklist to make your transition as easy as possible. Your agent will likely have some useful resources for you, from moving companies, to local utilities and near-by amenities, that can help make the process smooth and efficient. If you are moving with small children, here are some tips to help you through the process and give your kids the best transition possible. Once you are moved and settled, you can start the process of creating the dwelling of your dreams.

This is the third post in our four-part home resolution series. Read the first posts on setting and sticking to resolutions and making your house a home.

Practical Resolutions: Making Your House a Home (Part II)

Your home is a reflection of your tastes, your lifestyle and your ambition, and many of us are regularly transforming our homes one way or another to fit our adjusting needs. Whether it is refreshing a room to fit your style, reorganizing a closet to accommodate the holiday excess, going green to save the planet and a couple of bucks or a complete renovation of your kitchen- homes take maintenance. Some projects come about on a whim, but if you have any plans to make your nest nestier here are some ideas for not getting too overwhelmed by the process- no matter how large or small the changes you want to make:

Get Organized: Whether it is your closetsbookspantry or your entire basement identifying the problem is the first step. Once you know where to focus your energy think about the purpose your space should fulfill, what you want it to look like and how you can keep it organized for the long-term. Sometimes getting organized is a matter of doing a little bit every day, or it is finding the right storage solution. Once you know what the problem is you can identify your steps, timeline and budget. Ultimately, getting rid of the clutter and holding onto items you love the most and use will keep your spaces easy to manage year round.

Do a little every day: Everyone has a different method to managing home madness; some have a weekly cleaning routine, some focus room by room others pile everything in the closet until they have to deal with it. If you have a goal of getting rid of old possessions and clutter, remodeling your home office or keeping your home cleaner spend five to thirty minutes a day working to achieve your goal. Here is a good idea for keeping your home clean by doing a little every day, rather than spending your weekend playing catch up.

Beautification/ Gardening: This year my big goal is to finally start our edible garden, but I have been overwhelmed by all the steps- from finding the right containers for the garden, deciding what to plant, when to start the starts, etc. Each region has different gardening challenges; the plants that thrive in Seattle are different than Spokane or San Diego so if you are planning on a garden make sure you familiarize yourself with local resources that will give you advice specific to your area. If you have any landscaping projects, keep in mind advance planning is paramount to making this affordable, timely and sustainable. If you are planning on putting your house on the market eventually, make beautification a priority and plan your exterior in a way that will increase the curb appeal of your home in the future.

Home Improvement Projects: If you have an ongoing list of home improvement projects, make sure you have the right tools in your toolbox and prioritize and plan. You don’t want to spend every weekend working on dripping faucets so create a routine. When looking at the year ahead, think about seasonality of the projects. It is important to know when to ask for help from a professional in order to have repairs done right in the first place to avoid putting yourself at risk or the safety of your home.

Go Green: If your resolution this year is to save money and the planet by reducing your carbon footprint there are projects you can do large and small. Start with an energy audit, that way you know where your energy is actually being used- you may be surprised. Easy fixes start with replacing light bulbs with CFLs and buying energy cords that limit vampire appliances to use energy when they aren’t in use. If you are replacing your old appliances with newer energy efficient models, make sure you check into recycling programs in your area. Go here for more green resolution ideas.

Renovations: Whether you are doing the renovations yourself or working with a contractor, projects of scale are never easy. Make sure you plan for the inconvenience of going without a kitchen as well as the details of putting your new kitchen in place. Also, before investing in a renovation, make sure you will get a return on your investment when you resell.  If you are looking to increase the value and marketability of your home check out this list before you start tearing down walls.

This is the second post in our four-part home resolution series. Find the first article on how to identify and plan for your new year’s goals here.

Practical Resolutions: Preparing for the Best in 2016 (Part I)

Everyone’s list of things to accomplish in the upcoming year is different, but one thing is pretty universal: most of us are too ambitious for our own good. The best thing to do is make reasonable goals for yourself and work towards accomplishing them one at a time. So be realistic. You may not renovate your entire home, but in all likelihood you can finish your kitchen remodel.  You may start the year with plenty of momentum; just remember to pace yourself when it comes to big goals--it’s a marathon, not a sprint.  Here are some tips to keep your goals in check:

Set a goal: I find it useful to create a bucket list of all the things I want to do and prioritize the most important, most time consuming and most expensive. Your goals and what you do to accomplish them will differ whether you are making your home more your style, saving to buy or preparing to sell. From this list you can prioritize the goals in order by urgency, seasonality, and difficulty. If you cannot fit all your projects in this year, move them to the rolling 2012 bucket list.

Make a budget: Do your research and make an informed budget. If you are looking to renovate, you will want to make a plan, check resources and make an informed budget. If you are looking to save up for your down payment on a home, you will want to assess how much you need to have saved in order to have enough to put down, and create a budget plan. Creating a budget is a great way to keep your finances in check and keep your projects as affordable as possible.

Set benchmarks: If you have a big goal, breaking it up into smaller bites is the best way to stay motivated. If you can do a little bit every week to keep your home clean and tackle an organization project, you are more likely to sustain the momentum than if you attempt a complete overhaul. Also, there’s one great thing about goal setting, budget making and project planning: the more you practice, the better you become!

Stay motivated: Your resolutions may already be going by the wayside now that we are caught back up in life-as-always. It may help to write out your resolutions in a central place--a document on your computer desktop, a list on your fridge, or benchmark reminders in your mobile calendar. The key is to keep your resolutions at the top of your mind so you can work towards them a little bit every day/week. For more advice on how to keep your momentum, go here.

 

The new year offers the chance of renewed energy to accomplish the goals from past years and start fresh projects. This is the first post in a four-blog series about setting home resolutions, come back to see more information on making your existing home more personal, and buying and selling your home in 2016.

Raise a Glass and Celebrate the New Year!

Sparkles. Confetti. GLITTER. All New Year’s Eve staples. In fact, we’re pretty sure that New Year’s Eve is the quintessential holiday for all things glitter. Whether your plans involve throwing a party or attending one, here are some creative ideas to step up your game.

Confetti Wands: All you need is clear tubes and confetti, how simple is that?! Once you stuff them, lay them out somewhere all your guests can easily find them (so probably by the bar). We know what you’re thinking: “Don’t they make a mess?” Well yes they do, but what fun can you have without making a little mess?! So sparkly and festive!

Bubbly Bar: It’s not a New Year’s Eve party without one of these. A “bubbly bar” allows your guests to taste and personalize their champagne drinks. A bar cart is a great alternative if you want to make the bubbly bar a mobile attraction. They’re the perfect display for your champagne and treats. P.S. metallic straws are totes all the rage. Pop, fizz, clink!

Golden-Brushed Balloons: Go out and get a dozen helium-filled white latex balloons with strings attached. Wear gloves and hold the balloon by the tied end. Use gold enamel paint or “liquid gold leaf” and apply to balloons in quick, upward strokes. Make sure to only gild the bottom third to get this look. OR you could just buy gold balloons if you’re running low on time/gumption/is it 2016 yet?

Sparkly Bottles: Glam up your bottles and make them as sparkling as the wine inside. Grab a can of Super 77 adhesive spray, latex gloves, an old sheet, and as much glitter as you can find. Spray the bottle and sprinkle glitter over the adhesive one section at a time. Repeat until the whole bottle is covered, then shake off the excess glitter and display. Make sure to leave the top third of the bottle clean so you can pop the champagne! Hint: this is probably the easiest, yet most effective way to take your shindig to a whole new level!

Quirky Tip: Add a little extra something by hanging a fortune cookie off of each champagne glass. Everyone is going to want to know what’s in store for them once the clock hits midnight. And we all know fortune cookies always tell the truth.

New Year’s Eve is obviously the perfect reason to get fun with your champagne, so try something new this year! What’s better than some good ol’ bubbly? PINK bubbly. Cuz everything’s better in pink. Check out more ideas and details on our Pinterest page.

#YourStoryIsOurStory: Three Generations

You know you trust your realtor when you will recommend their services to your parents and your children! Sue Rockwell has known Chip and Teresa for decades, as a friend and trusted real estate advisor, but when their aging parents, George and Teresa needed help selling their townhome, they knew they could depend on her to make their transition into their retirement community seamless. And when Blakeley, their daughter was looking for her first place to own, Sue was right there to help her every step of the way.

Throughout the year we will be posting some of our favorite #YourStoryIsOurStory videos, photos, and blog posts. Please take a minute to share your experiences, and follow #YourStoryIsOurStory on our blogFacebookTwitterInstagramYouTube, and Pinterest pages.

 

Happy Holidays from Windermere Real Estate

On behalf of everyone at Windermere Real Estate, we wish you a very happy holiday season!

 

There’s No Need To Panic About Rising Interest Rates

This article originally appeared on Inman.com 

 

After seven years of some of the lowest interest rates in recorded history, the Federal Reserve has decided to raise the key Fed Funds Rate by 0.25 percent, which is causing some to be concerned that it will lead to a jump in mortgage rates and negatively impact the US housing market.

So, the question everyone wants to know is, do we need to worry about interest rates leaping?

While I expect there to be some volatility in rates for a while, I don’t believe the real estate market will implode in a rapidly rising interest rate environment. So, yes, interest rates are going to rise modestly, but no, I don’t think we need to be overly worried about it.

To qualify this statement, we need to understand that mortgage rates do not run in “lock-step” with the Fed Funds Rate. Although the Fed Funds Rate is a bellwether for the greater economic environment, there have been times when these two rates have moved in opposite directions, such as we saw in 2004/2005.

It’s also important to understand that while interest rates for revolving credit, such as credit cards and home equity loans, are tied to the Fed Funds Rate, non-revolving loans – like mortgages – are not. Mortgage rates are tied to bond yields – specifically the 10-year treasury.

So what do I think will happen?

I believe interest rates will rise above 4 percent, but we will not see a sharp spike in rates. The Fed has stated that any upward movement in the Fed Funds Rate will be slow and steady, and will reflect the greater economy. And I believe that mortgage rates will follow suit.  Additionally, mortgage rates have already moved higher in anticipation of an increase in the Fed Funds Rate.

That said, it is worth noting that any weakness in the global economy can actually have a downward effect on interest rates. This is referred to a “flight to quality”. In essence, investors seek safe haven during times of economic uncertainty. If markets outside the U.S. continue to underperform, there will likely be increasing demand for bonds which will drive up their price and drive down interest rates. Between China, the Eurozone, war in the Middle East, and a massive drop in oil prices, it's certainly possible that the price of mortgage backed securities could rise, leading U.S. mortgage rates lower.

Interest rates could not realistically stay at their current levels forever. But an increase should not be a great cause for concern. Yes, an increase makes mortgages more expensive, but not to a point where they will have a negative effect on home values. That said, the rate of home price growth will undoubtedly slow in the coming year, but that isn’t necessarily a bad thing.

A little perspective might help: the average rate for a 30-year loan in the 1970’s was nine percent. It was 13 percent in the 1980’s and eight percent in the 1990’s. And yet people still managed to buy and sell homes throughout those years. With that in mind, the rate increases we’re likely to see in 2016 are nothing to fret over.

The increase in the Fed Funds Rate should be taken as a sign that our economy is expanding and is a preemptive move to limit anticipated inflation. While interest rates have risen from their all-time low, they are still remarkably favorable. And will remain so through 2016.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.