Although I have over two decades of experience working in the Central Florida area I continue to be amazed at how fast our community is growing. Economic development continues to thrive in our areas of Polk, Osceola, Orange, Seminole, and Pasco counties. During my research of the current trends and forecasts for the end of CY 15 and the beginning of CY 16 I found this great article that provides the down and dirty of what we may see in the Central Florida areas. As you will read the real estate market is ever changing and it is the educated who will reap the benefits. According to Beth (2016), the housing market here in Central Florida had a good year, as median prices and sales posted strong results throughout the year.
Beth (2016) provides several insightful points of the highlights of the forecast:
Interest rates will gradually move higher. Homeowners who have adjustable-rate mortgages or home-equity loans will most likely see a rise in their interest rate because the Federal Reserve is expected to raise short-term interest rates 1 percentage point between now and the end of 2016. Fixed-rate mortgages will also rise between now and the end of 2016, reaching 4.5 percent for 30-year loans. Despite the increase in interest rates, mortgage rates will remain historically low.
Household formations will significantly add to housing demand. More than 1.25 million new households will be formed in 2016 due to improvements in the labor market and lower unemployment rates. This, in turn, will increase housing demand, specifically in the rental market.
Rental homes will continue to be in high demand. Rental vacancy rates are at or near their lowest levels in 20 years, and rents are rising faster than inflation. High demand for rental homes — both apartments and houses — will likely continue in 2016, especially from new, young households.
Home sales and home prices will likely increase. Not only is the rental market hot, but overall purchase demand may lift 2016 home sales to the best year since 2007. Nationally, home prices are forecast to rise at a quicker rate than inflation, but not at the same rate as last year. The CoreLogic Home Price Index showed a year-over-year increase of 6 percent in the last 12 months; however, 2016 is only expected to see increases of 4-5 percent.
The dollar volume of single-family mortgage originations will fall about 10 percent. The single-family mortgage origination decline will occur even though home equity lending is expected to rise and originations of home purchase loans will likely rise about 10 percent in volume next year. The growth in those two areas will be offset by a 34 percent drop in refinance, reflecting the higher mortgage rates and dwindling pool of borrowers with a strong financial incentive to refinance.
CoreLogic chief economist Frank Nothaft said "As we approach the start of 2016, the consensus view among economists is that economic growth will continue, and the U.S. will enter an eighth consecutive year of expansion in the second half of next year. Most forecasts place growth at 2 and 3 percent during 2016, creating enough jobs to exert downward pressure on the national unemployment rate."
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