The housing outlook for 2016 looks very strong. For the first time in three years it seems even the most conservative economic experts are in agreement. This year will be the best since the housing recession of past years.
The indicators that these experts rely on are all looking better for the coming years, starting with this year. Household formations will top 1.25 million in 2016…this is a large driver of new home sales. The rental market is very tight causing rents to increase significantly. Combined with low mortgage interest rates, buying a home looks even more affordable. The “Home Purchase Sentiment Index” from Fannie Mae has two compelling improvements for December of 2015. First consumer sentiment improved with regard to income, job security, and economic outlook. Secondly, more consumers now believe that it is a good time to sell a home.
What does all this mean for McKee Homes? First time buyers are coming into the market and we are well positioned to appeal to them. Great plans at very affordable prices…and we include features that are optional elsewhere. With special financing available many buyers will not need a down payment…usually a barrier to purchasing.
Why is being confidant about selling a home good for McKee? Because most move up buyers need the equity from their current home…and do not want to sell in a “down market”. Selling their current home gives them the opportunity to purchase a new home with the features they want.
With an improving economic forecast and the government raising interest rates, most of these experts are predicting mortgage interest rates to be 4.75%-5% by the end of the year. This may not seem like much…but here is what it means.
For the average buyer of a McKee home, the principal and interest payment will be $134 higher by the end of 2016…over thirty years this amounts to $48,240!!!
Or put another way, a buyer could add $28,000 in options today for that same $134 per month additional payment.
The other compelling factor for purchasing sooner rather than waiting is the increasing price of homes. Even Robert Schiller, the foremost housing expert, is anticipating prices rising 4-5%. Based on our average sales price that means prices will go up by almost $12,000 this year.
All this bodes well for McKee homes in 2016. Let’s make it happen together!