Forecast for San Diego Housing Market: Strong Gains Through 2020?

How’s this for a favorable forecast? The San Diego housing market could experience steady home-price appreciation from 2016 to 2020, with prices rising by around 3% – 6% annually for each of those years.

That’s the general consensus among the housing economists at Moody’s Analytics. They recently gave MONEY magazine (part of Time) their home-price forecasts through 2020, for 20 of the biggest metro areas in the United States.

The San Diego real estate market was included in the report. And while home prices in the area might not rise as much as they have in recent years, the company’s economists are still calling for steady gains through 2020. And that’s not surprising when you look at the current supply and demand situation.

Read: San Diego a “market to watch” in 2016

Home Price Forecast for San Diego Housing Market

The bar chart below shows the Moody’s Analytics home price predictions for San Diego’s housing market, over the next five years. As you can see, local house values are predicted to continue rising through 2020 (and possibly beyond that, though the team didn’t forecast that far).

san-diego-forecast
San Diego home price forecast. Source: Time.com.

This puts the San Diego real estate market on a short list of metro areas that are expected to outperform national housing trends over the coming years.

Homeowners across the metro area have enjoyed steady appreciation over the last couple of years, and it’s a trend that could continue for the foreseeable future.

Many home buyers, on the other hand, are being squeezed out of the real estate market by ever-rising house values. The housing affordability issue in San Diego has been well documented, and it could worsen over the coming years as home price appreciation outpaces income growth.

Inventory Shortage Driving Appreciation

Inventory has a lot to do with the recent rise in San Diego home prices, and the positive pricing forecast through 2020. There just aren’t enough homes for sale to meet the current level of demand, and it’s lifting house values across the metro area.

In January 2016, San Diego experienced the biggest drop in homes for sale, in the entire nation. This is according to a recent report by Zillow, the real estate information company. The San Diego housing market had a 30.2% decline in housing inventory (including both new and existing homes, as well as condos) during the 12-month period from January 2015 to January 2016. That was the largest decrease in the country, followed by Charlotte, N.C. at 27.1%.

It’s no coincidence that home prices rose steadily during that period as well. According to the most recent S&P/Case-Shiller Home Price Index (published on March 29, 2016), house values in the San Diego metro-area housing market rose 6.9% from January 2015 – January 2016. That was higher than the national average for the same period, and a direct result of the inventory reduction mentioned above.

According to Aaron Terrazas, a senior economist at Zillow, the inventory shortage in San Diego’s real estate market is partly the result of homeowners who are reluctant to sell:

“People in these expensive places who own homes are a little bit reluctant to go out and search for a new home,” he said. “They’re worried they won’t find anything comparable to what they have.”

It’s a valid concern, and it’s keeping a lot of would-be sellers off the market for now.

Disclaimer: This story contains long-range home price and housing market forecasts for the San Diego metro area. Such forward-looking statements were provided by third parties not associated with this website. As a matter of policy, the Home Buying Institute makes no predictions or claims about future real estate conditions. We merely gather and report the forecasts made by other expert sources, as a service to our readers.

California Real Estate Markets Dominate Realtor.com ‘Hot’ List, Again

Last week, Realtor.com updated its list of the 20 hottest housing markets in the U.S. This popular, recurring series looks at housing conditions in medium to large metropolitan areas across the country, and then ranks the hottest markets based on local supply and demand factors.

California once again dominated the company’s hot list. Twelve of the 20 hottest housing markets for February are located in the Golden State. The top-10 list has an even higher percentage, with a total of eight California housing markets making the cut (80%). Again, this is among medium to large metro areas.

This coincides with a November 2015 forecast, which predicted that most of the hottest markets of 2016 would be located in California. As it was predicted, so it has become.

12 California Housing Markets Ranked Among “Hottest”

Here are the top 20 hottest housing markets for February, by Realtor.com’s estimation:

  1. San Francisco, CA
  2. San Jose, CA
  3. Dallas, TX
  4. Denver, CO
  5. Vallejo, CA
  6. San Diego, CA
  7. Santa Cruz, CA
  8. Santa Rosa, CA
  9. Stockton, CA
  10. Oxnard, CA
  11. Sacramento, CA
  12. Los Angeles, CA
  13. Boulder, CO
  14. Modesto, CA
  15. Eureka, CA
  16. Portland, OR
  17. Nashville, TN
  18. Colorado Springs, CO
  19. Palm Bay, FL
  20. Tampa, FL

Methodology for Measuring the Hot Factor

The economic team at Realtor.com created this list by determining which U.S. housing markets had the best availability (good for home buyers) along with the highest level of demand (good for sellers).

To measure housing demand, they looked at the total number of real estate listing views for each metro area, on the Realtor.com website. To measure supply, they used the median number of days on market, primarily. This led to the creation of the hottest housing markets list, a list that gets updated each month as local market conditions change.

In the California (and other) housing markets shown above, real estate listings are viewed two to five times more often than the national average, according to a company representative. Homes are currently selling faster in these hot markets as well — as much as 78 days faster than the national average. This is often the result of limited inventory, which forces buyers to compete fiercely with one another for available homes.

San Francisco Still #1, With San Jose Rising

There are some familiar names on this list. For instance, the San Francisco, California housing market has been ranked #1 on the hot list for four months in a row. San Jose has been climbing steadily through the rankings and could eventually take the top spot, partly a result of tech money and demand in the Silicon Valley real estate market.

“These are the places that are head and shoulders hotter than the rest of the country,” said Jonathan Smoke, chief economist at Realtor.com, “and they’re also accelerating.”

Texas Housing Markets Ideal for Investors in 2016, According to Forbes

According to a recent report, Texas has some of the best residential real estate markets for investors. This is based on an analysis of the 100 largest metro areas in the country. Housing markets in Austin, Dallas and San Antonio were all ranked within the top 10, as far as best places to invest in a home.

The analysis was conducted by Forbes, with help from Local Market Monitor, a North Carolina-based company that monitors home prices and other economic conditions across the country. Florida cities also fared well in the rankings. Cape Coral, Fort Lauderdale and Orlando made the top ten.

Austin, Dallas, San Antonio: “Best Buy” Housing Markets

Home prices rose steadily in 2015, all across the United States, and more gains are expected in 2016. In fact, house values have risen faster than job wages, and that has created affordability problems for buyers in some parts of the country.

But for real estate investors seeking to purchase rental properties, opportunities abound — especially in the 10 housing markets listed below.

To find out which cities were poised to give investors a solid return, Local Market Monitor analyzed the 100 largest metropolitan statistical areas in the U.S. (all with populations of 600,000 or higher). They then identified housing markets with favorable conditions for investors and “regular” home buyers alike. These markets all have healthy job growth, population growth, and anticipated home price appreciation.

The result was a top-20 list of “Best Buy Cities” for 2016. An abbreviated top-10 version is shown below.

Top 10 “best buy” housing markets for investors, with average home price:

  1. Grand Rapids, MI – $154,348
  2. Orlando, FL – $202,809
  3. San Antonio, TX – $200,522
  4. Charlotte, NC – $220,758
  5. Salt Lake City, UT – $258,371
  6. Dallas, TX – $211,245
  7. Austin, TX – $281,355
  8. Fort Lauderdale, FL – $258,577
  9. Seattle, WA – $370,306
  10. Cape Coral, FL – $211,531

As you can see, three of the top 10 real estate markets for investment are located within Texas — Austin, Dallas and San Antonio. According to the Forbes article that announced the results:

“… these three Texas metros are doing well overall thanks to their diversified economies … Austin is welcoming growth in high tech. Dallas is welcoming the relocation of Toyota, State Farm Insurance, and Liberty Mutual Insurance. San Antonio has financial firms and data centers.”

The three Texas cities listed above all have strong job markets that attract people from other parts of the state, and from elsewhere in the country. This puts more home buyers into the market and increases demand for housing, at a time when there’s a supply shortage. This is why home prices have risen so fast in the Austin, Dallas and San Antonio housing markets.

Related: Dallas one of the hottest markets in 2016

Home Prices Climbing in Texas Metros

According to Zillow, home prices in Austin and Dallas rose by double digits last year. Additional, but more modest, gains are expected in 2016. This is partly due to the supply-and-demand imbalance mentioned earlier. In short, there aren’t enough homes for sale in these real estate markets to satisfy demand.

Local Market Monitor expects prices in these housing markets to continue climbing over the next few years. Their three-year home price growth projections for Austin, Dallas and San Antonio are all above 25%. The authors explained that “there continues to be a shortage of housing supply, meaning prices are likely to keep on rising.”

Home Prices Rose in 91% of Housing Markets Last Year, According to RealtyTrac

Earlier this month, the real estate data firm RealtyTrac published its “Year-End 2015 U.S. Home Sales Report.” The report revealed that most local housing markets in the U.S. have experienced price gains within the last year — some in the double digits.

According to the company, 91% of the markets analyzed experienced a year-over-year increase in median home prices during 2015.

The report also showed that home sellers in the U.S. enjoyed an average price gain of 11% since purchasing their homes. That was the largest average price gain for sellers since 2007, marking an eight-year high.

91% of Housing Markets See Year-Over-Year Price Gains

At the end of 2015, the median house price in the United States was $206,500. That was 10% higher than the same time in the previous year, the result of steady appreciation in the housing market. Furthermore, December 2015 marked 46 consecutive months of year-over-year gains in the nation’s median home price.

This is further evidence that the country has left the housing crisis far behind, and is now appreciating steadily.

In its latest assessment, RealtyTrac analyzed 87 major metropolitan areas across the United States. Seventy-nine of those metro-sized housing markets (or 91%) had experienced a year-over-year increase in median home prices by the end of 2015. House values in other cities surrounding the 87 metros likely rose as well, due to the “halo” effect of real estate market appreciation.

Biggest Winners: St. Louis, Raleigh, Detroit and Tampa

RealtyTrac also analyzed the 46 largest housing markets in the U.S. (with populations of 1 million or more) to see where the biggest annual home-price gains occurred. St. Louis, Missouri experienced the biggest increase in 2015, with a whopping 19% rise in its median home price.

The Raleigh, North Carolina housing market posted a gain of 17%, as did Detroit, Michigan. The median home price in Tampa, Florida rose by 15% last year, according to RealtyTrac’s analysis. Denver; Seattle; San Jose and Providence, Rhode Island all had double-digit gains of 13%.

(On a side note, Denver and Seattle were recently named two of the hottest markets to watch in 2016. So it’s no surprise to find them singled out in the RealtyTrac report.)

Other highlights from the February 2016 report:

  • 38% of the 87 metro-area housing markets analyzed have reached new all-time highs. (Related story: New price peaks seen in Boston, Dallas, Denver and Portland)
  • Home sales volume reached a nine-year high at the end of last year.
  • Distressed (foreclosure) sales and short sales fell to an eight-year low in December, signaling a healthier housing market.
  • All-cash home sales fell to a seven-year low at the end of last year, as investors pull back from the market.
  • FHA loans have become increasingly popular among home buyers. FHA market share rose to a four-year high in December, according to several sources.

Are Home Prices Cooling in 2016?

It’s easier to analyze the past than predict the future. So it’s hard to say exactly what the U.S. housing market will do through the rest of 2016. But the general consensus among analysts and economists is that home prices in many U.S. cities could rise at a slower pace in 2016, or flat-line completely.

In fact, we’re seeing a general cooling trend in many major cities already, particularly those that experienced larger-than-average home price gains over the last year (such as San Francisco).

According to the real estate firm Zillow, the U.S. median home value rose 4.0% over the past year. The company predicts a more modest gain of 2.6% within the next year. This forecast was issued in February 2016.

Three Florida Housing Markets That Look Good for Investors

According to a new report, Florida housing markets in Orlando, Fort Lauderdale, and Cape Coral offer ideal conditions to real estate investors in 2016. Those three cities recently appeared in a top-ten list of best markets for investors.

The list was compiled by Forbes with help from Local Market Monitor, a North Carolina company that tracks house values and economic conditions across the country. Texas cities were also prominent in the rankings. Austin, Dallas and San Antonio appeared within the top ten.

Is 2016 a Good Year for Real Estate Investors?

Home prices are still rising in most U.S. cities, as they did through most of last year. That might seem like a good thing. The problem, however, is that house values are rising faster than wages in many cities. By comparison, wages have remained relatively flat over the past months.

Read: 7 positive trends in the housing market

This creates affordability problems for the average home buyer in 2016, especially those in the lower and middle income brackets.

But 2016 could be a good year for real estate investors, particularly in housing markets like Orlando, Cape Coral and Fort Lauderdale (to name but a few). In such markets, economic conditions favor investors who want to put their money into rental properties.

Homes in these markets can be purchased for a good price and turned into an income stream, and possibly resold down the road for a higher price.

Many of the housing markets that made the top 20 are still considered undervalued. Most of the cities on the list had a combination strong population growth, job market stability, and expected home-price appreciation in 2016. These are considered to be ideal conditions for real estate investors, according to the report.

Cape Coral, Fort Lauderdale and Orlando Housing Markets Look Good for Buyers

To find out which housing markets offered investors and home buyers the best bang for the buck, Forbes and Local Market Monitor examined the 100 biggest metro areas in the U.S. (all with populations of 600,000 or higher). They zeroed in on markets with favorable characteristics for real estate investors and “regular” home buyers. The result was a top-20 list of “2016 Best Buy Cities.”

The full top-20 list is available on the Forbes website. An abbreviated top-10 version is shown below.

Top 10 “best buy” cities for investors, shown with average home price:

  1. Grand Rapids, MI — $154,348
  2. Orlando, FL — $202,809
  3. San Antonio, TX — $200,522
  4. Charlotte, NC — $220,758
  5. Salt Lake City, UT — $258,371
  6. Dallas, TX — $211,245
  7. Austin, TX — $281,355
  8. Fort Lauderdale, FL — $258,577
  9. Seattle, WA — $370,306
  10. Cape Coral, FL — $211,531

As you can see, three of the 10 “best buy” housing markets for investors are located in Florida — Cape Coral, Fort Lauderdale and Orlando. All told, there was a total of seven Florida cities within the top 20.

Will Fort Lauderdale Home Prices Drop in 2016?

As mentioned earlier, home prices are expected to continue rising in most of the housing markets on the Forbes / Local Market Monitor list. But there were exceptions as well.

According to the economists and housing analysts at Zillow, home prices are expected to rise in only two of the three Florida cities in the top-10 list above. The company’s 12-month forecast calls for rising house values in Cape Coral and Orlando, during 2016. In contrast, prices in Fort Lauderdale are expected to drop slightly over the next 12 months.

Here is Zillow’s 1-year forecast for all three housing markets, as of February 2016:

City 1-year change 1-year forecast
Cape Coral +11% +3.7%
Fort Lauderdale +6.2% -1.8%
Orlando +11.6% +4.2%

Granted, these forecasts are the equivalent of an educated guess. But it’s a well-educated guess made by some of the most data-savvy analysts within the real estate industry. So it’s certainly worth considering, if you’re a real estate investor or home buyer.

Disclaimer: This story contains research, opinions and forecasts from third parties that are not associated with the Home Buying Institute. The publishers of this website make no claims or assertions regarding future conditions within the housing market.

Denver, Seattle and Dallas Hottest Housing Markets for 2016, Says Zillow

According to a recent report by the real estate information company Zillow, Dallas, Denver and Seattle are the three hottest housing markets to watch in 2016. Home prices in these three cities — all of which are considered “tech towns” — are expected to rise steadily in 2016.

Of course, this should come as no surprise to anyone who follows real estate headlines (or HBI’s news blog). We’ve been reporting on these red-hot housing markets for months now. For instance, our readers might recall that home prices in Dallas and Denver returned to pre-housing-crisis peaks way back in 2013, and have been rising steadily since then.

Zillow’s Hot List: 10 Markets to Watch in 2016

To determine which housing markets would be sizzling in 2016, Zillow’s economic team examined home price trends, job market strength, and income growth among local residents. They then created a list of the top ten housing markets to watch in 2016, based on the above factors.

Zillow’s Top 10 Housing Markets for 2016:

  1. Denver, Colo.
  2. Seattle, Wash.
  3. Dallas-Fort Worth, Texas
  4. Richmond, Va.
  5. Boise, Idaho
  6. Ogden, Utah
  7. Salt Lake City, Utah
  8. Omaha, Neb.
  9. Sacramento, Calif.
  10. Portland, Ore.

So why have Denver, Seattle and Dallas-Forth Worth appeared on so many of these “hot lists” lately? What makes them the darlings of housing analysts and economists? Here’s an in-depth look at current and past real estate trends in these hot markets.

Denver: Mile-High City With Home Prices to Match?

Home prices in the Denver metro area skyrocketed in 2015, and they’re still following an upward trajectory. According to the latest release of the S&P/Case-Shiller Home Price Index (published on January 26, 2016), house values in Denver have hit yet another all-time high. That means house values have never been higher than they are right now. Prices in the Mile-High City rose by double digits over the last year or so.

Inventory is tight in the Denver real estate market. There simply aren’t enough homes listed for sale to meet demand, and this imbalance will likely push home prices even higher in 2016. A lot of folks are moving to this metro area from other states, but residential construction hasn’t kept pace. As a result, the Denver housing market could be a hot spot for appreciation in 2016.

Seattle Another Housing Market to Watch in 2016

Last fall, Seattle was ranked #4 on the Urban Land Institute’s list of markets to watch in 2016. And the city now appears on a similar list created by Zillow. So why is everyone clamoring about the Seattle housing market in 2016? What makes it such a frequent entrant on these lists? Once again, inventory is a major factor.

According to Realtor.com, the number of homes listed for sale in Seattle has declined by 30% over the last year or so. Meanwhile, the city’s population is growing steadily. In 2014, Seattle was the fastest-growing city in America by Census Bureau estimates. They’re coming for jobs, in many cases. After all, the city boasts an unemployment rate well below the national average.

It’s that supply-and-demand thing again. There are plenty of home buyers in the market to buy a home, but not enough homes available. This will make Seattle one of the hottest housing markets in 2016, by Zillow’s estimate.

Dallas Cooling Down, But Still Hot

What can we say about the Dallas real estate market we haven’t said before (like a month ago)? It’s another one of those metro areas with low unemployment and a high influx of workers. Translation: The “Big D” is getting bigger. But, once again, there aren’t enough homes on the market to meet demand.

Home price appreciation in Dallas could slow down a bit in 2016. Zillow predicts a gain of 5.6% over the next 12 months, compared to a whopping 16% over the last 12 months. So a market cool-down could be on the horizon. But 5.6% is still well above the national forecast for year-over-year price growth, and that makes Dallas another hot housing market to watch in 2016.

Washington, D.C. Foreclosure Home Inventory Above National Average

There are still plenty of foreclosure homes available within the Washington, D.C. housing market, and they represent a money-saving opportunity for buyers willing to jump through some hoops. 

We are all (painfully) familiar with the spike in home foreclosures that occurred toward the end of the previous decade. Risky mortgage loans, rapidly declining home prices, and rising unemployment forced many Washington, D.C. homeowners into foreclosure during the late 2000s.

Related content: 2016 housing forecast for D.C. metro area

The foreclosure rate across the Washington, D.C. metro area has dropped considerably since those days. But it still remains higher than the national average. This is based on new research conducted by CoreLogic and published in December.

The “hidden” message here is that savvy investors and open-minded home buyers can still find bargains in the Washington, D.C. real estate market, in the form of distressed properties.

Today, the nationwide foreclosure inventory (the share of home loans that are in some state of foreclosure) is a fraction of what it was during the height of the housing crisis. It was a mere 1.2% when last measured a couple of months ago. Call it a return to normalcy. But there are still some areas with a relatively high level of foreclosures.

According to CoreLogic, the bulk of the nation’s foreclosed home inventory is concentrated in a handful of states and the District of Columbia.

Washington, D.C. Among Areas With High Foreclosure Inventory

The states with highest foreclosure levels — relative to the total number of homes with mortgages — were New Jersey (4.5%), New York (3.6%), Hawaii (2.5%), and Florida (2.5%). Washington, D.C. rounded out the top five with a 2.3% foreclosure rate.

It bears repeating: This is a big improvement from where we were a few years ago. The Washington, D.C. housing market has improved in many ways since the Great Recession, and that includes a gradual reduction in foreclosure inventory. The same can be said for the nation as a whole.

Anand Nallathambi, president and CEO of CoreLogic, acknowledged these housing market improvements in a statement accompanying the foreclosure report:

“We are heading into 2016 with the lowest foreclosure inventory [nationwide] in eight years thanks to escalating home values and progressive improvement in the U.S. economy … Equally encouraging is the drop in mortgage delinquency rates.”

An Opportunity for Bargain-Minded Home Buyers

Foreclosures are often regarded as the dark underbelly of the Washington, D.C. housing market. But they also represent opportunity for home buyers. Distressed properties are often listed and sold below their true market values, in order to ensure a quick sale. Bank-owned homes (REOs) and short sales, in particular, can be bargains for market-savvy buyers who are willing to consider them — but not all buyers are.

Granted, buying a foreclosure home in the Washington, D.C. metro area can be tricky, and the purchase process could take longer when compared to a traditional real estate transaction. That’s because the bank is often involved. In a regular transaction, the buyer presents the offer directly to the homeowner, who can then accept or reject it. But when it comes to distressed properties, the bank usually has to give the green light.

Additionally, foreclosure homes have a somewhat deserved reputation for being neglected, and sometimes even vandalized. But for those brave enough to face these obstacles, the Washington, D.C. foreclosure market can be a world of opportunity.

7 Trends That Show the Housing Market Is Going Up

The U.S. housing market as a whole continues to strengthen, with the collapse of 2008 fading farther in the rear-view mirror. Local housing markets across the country are stabilizing at a rapid rate, with more cities entering their stable ranges every month. These are the latest housing markets trends being reported by Freddie Mac. According to their most recent report, all signs point to a housing market that is still going up.

On January 27, Freddie Mac (OTCQB: FMCC) published its latest Multi-Indicator Market Index® report, known as MiMi for short. The latest data show that the U.S. housing market is continuing along its road to recovery. Trends are improving at the metro and state level as well.

At a Glance: How MiMi Tracks Market Stability

MiMi tracks and measures the overall stability of the U.S. housing market. It also monitors housing trends in all 50 states, the District of Columbia, and the top 100 metropolitan-level markets across the country.

MiMi uses a variety of indicators to assign a “stability” score to each of the aforementioned housing markets. Indicators include:

  • Home purchase applications
  • Payment-to-income ratios
  • Proportion of on-time mortgage payments
  • Local employment trends

Based on all of this, MiMi assigns a score to each housing market to determine where it is in relation to its long-term stable range. A higher number indicates a more stable market, and vice versa.

MiMi also determines trends and movement within each housing market, to determine if they are moving toward, of further away from, their stable ranges.

According to Freddie Mac: “A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.”

7 Trends That Show the Housing Market Is Still Going Up

Here are the latest positive housing market trends revealed by MiMi:

  • At the start of 2016, yet another U.S. state entered the outer range of what’s considered a “stable” housing market. Real estate conditions in Missouri are currently considered favorable, following a long period of instability. Missouri now joins 33 other states, plus the District of Columbia, all of which are showing stable housing market trends in 2016.
  • Four more metro areas entered their stable ranges as well. Local housing markets in Rochester, NY; St. Louis, MO; Birmingham, AL; and Milwaukee, WI are now showing signs of improved strength and stability.
  • Nationally, the housing market has improved significantly since the depths of the housing crisis. But there is still room for additional growth and improvement. The national MiMi score has rebounded 39% since hitting an all-time low in October 2010, and now stands at 82.5. While that marks a big improvement, the national MiMi is still well below its high point of 121.7.
  • Nationwide, there are now 33 states (plus Washington, D.C.) with housing values in their stable ranges. According to the MiMi ranking, the five most stable markets among states are: the District of Columbia (101), North Dakota (96.5), Hawaii (95.9), Montana (95.7) and Utah (93.3). This time last year, only 21 states plus D.C. had values in the stable range. So the housing market “health” appears to be spreading across the country.
  • Fifty-seven of the 100 major metro areas tracked by MiMi now have market values in the stable range. Fresno, California leads the advance with a MiMi value of 102.9, followed by Austin, TX (97.5); Honolulu, HI (97.1); Salt Lake City, UT (96.7); and Denver, CO (96.5).
  • At the metro level, the most improved housing market trends (month over month) were seen in Orlando, FL (+2.21%); Denver, CO (+2.01%); Portland, OR (+2.00%); Albany, NY (+1.87); and Phoenix, AZ (+1.86%).
  • Things are looking up in Florida. When measured year over year, the most improved metro-level housing markets were Orlando, FL (+19.48%); Cape Coral, FL (+18.27%); Tampa, FL (+17.65%); Denver, CO (+16.97%); and Portland, OR (+16.54).

While the U.S. housing market is improving as a whole, there are major differences at the local level. According to Freddie Mac’s Deputy Chief Economist Len Kiefer, regional variations in market health are becoming more noticeable:

“For example, we’re still seeing declines in oil-dependent housing markets, whereas the hardest hit metros from the Great Recession continue to see some of the best improvement as they recover. And at the same time, other markets are seeing even stronger improvement because of robust home sales fueled by strong local economies that remain largely affordable for the typical homebuyer.”

In the short term, Freddie Mac’s housing analysts expect home buyer affordability to “remain strong,” thanks in part to the favorable mortgage rates being offered by lenders these days.

Prediction: California and Texas Housing Markets Could ‘Soften’ in 2016

Home prices in California and Texas housing markets could rise more slowly in 2016, compared to last year. But a major downturn in house values is unlikely. This is the latest real estate market prediction offered by Fitch Ratings, one of the three recognized credit ratings in the U.S.

Of course, if you’ve been following the housing market headlines recently (or my column), this prediction should come as no surprise. We have covered similar forecasts for Texas and California housing markets in the past, and the general consensus is that home prices in both states will rise more slowly in 2016 than in the previous year.

California and Texas Housing Markets Could Cool in 2016

The Fitch Ratings housing prediction was part of a press release published on January 13, 2016. According to the release: “some regional U.S. markets are overvalued. California and Texas may experience a softening in their housing markets, though large downturns are unlikely.”

More broadly, the ratings agency predicts that U.S. home prices will increase by 4.5% in 2016, and that “nominal prices will approach levels reached during the 2006 housing bubble.”

Some local real estate markets (including Denver, Dallas and Portland) have already reached and exceeded their housing bubble peaks. Home prices in such cities are now entering uncharted territory.

Latest Forecast Good News for Home Buyers?

The Fitch forecast for smaller price gains is good news for home buyers in both Texas and California. After all, house values have been rising much faster than wages in recent years (13 times faster when measured last year). And nowhere is this disparity more evident than in California — and to a lesser extent Texas.

In both the Golden State and the Lone Star State, an increasing number of would-be home buyers are being priced out of the market. House values have risen at a much faster pace than wages and median income levels. So it’s becoming harder and harder for residents in the lower to middle-income bracket to purchase a house.

According to the real estate information company Zillow, home prices in California and Texas rose 5.6% and 8.5%, respectively, over the last year or so. But the annual gains are even higher in some markets, when you drill down to the city or metro level.

For instance, Zillow says home prices in Dallas, Texas rose by a staggering 16% in the last 12 months. They reported an annual gain of 14.3% in San Francisco. This is based on the company’s “Zestimate” method of measuring house values, as of January 2016.

In these and other red-hot housing markets, a cooling trend is probably a good thing. (Let’s not forget what happened the last time home prices skyrocketed in this manner. In a word — crash.)

At the state level, Zillow has predicted smaller gains for both California (2.6%) and Texas (4.4%) over the next year or so. This echoes the “softening” forecast issued by Fitch Ratings last week.

So the message to home buyers and sellers in both states is this: There’s a good chance home prices will continue rising through the end of 2016, in most Texas and California cities. But you probably shouldn’t expect the kinds of gains we saw last year.

Disclaimer: This article contains real estate market forecasts for California and Texas in 2016. Predictions were made by third parties not associated with the Home Buying Institute. The publishers of this website make no claims or assertions about future home prices or other housing-related conditions. Third-party data are deemed reliable but not guaranteed.

Highly Competitive Boston Housing Market Gets Higher Loan Limits in 2016

The Boston housing market remained fiercely competitive throughout 2015, leading to higher home prices across the metro area. This in turn brought higher loan limits in 2016, for both FHA and conventional mortgage loans. The question is: Will the Boston housing market remain hot through 2016, or is a cooling trend in store?

One of the Most Competitive Housing Markets of 2015

At the end of 2015, the real estate firm Redfin created a list of the most competitive neighborhoods in the U.S. for home buyers. They evaluated cities and neighborhoods across the country, with an eye out for trends that reveal competitiveness.

According to a company blog post, they considered “the percentage of homes that sold above asking price, how quickly homes went under contract and the percentage of Redfin offers that faced bidding wars.”

Surprisingly, the 30 most competitive neighborhoods in the nation were all located within one of four cities — Boston, Portland, San Francisco and Seattle.

Within the Boston metro-area housing market, the fiercest competition was found within the following neighborhoods:

  1. Inman Square (in Cambridge, MA)
  2. Brighton / Allston (in Boston)
  3. Springhill (in Somerville, MA)
  4. Cambridgeport (Cambridge)
  5. Powder House (Somerville)
  6. Neighborhood Nine (Cambridge)
  7. Washington Square (in Brookline, MA)
  8. East Arlington (in Arlington, MA)
  9. North Cambridge

Homes in these areas have been selling much faster than the national average, and with multiple offers and even bidding wars in some cases.

Katie Gustafson, a Redfin real estate agent who works in the Boston area, said multiple offers are common, particularly in the red-hot Cambridge housing market. “It’s incredibly rare for a home in Cambridge not to get multiple offers. Offering over list price, waiving contingencies — buyers are doing everything they can to compete,” she said.

These kinds of conditions are great for sellers, but they can make life harder for home buyers. To secure a property in such a hot market, buyers must make strong offers — in some cases above the asking price. This is largely why house values in the Boston area have risen so much over the last year.

Boston Borrowers Get Higher Loan Limits in 2016

Home prices in this metro area rose so much in 2015 that the Federal Housing Finance Agency (FHFA) decided to increase Boston’s conforming loan limits for 2016.

Last year, the conforming loan limit for a single-family home in the Boston-Cambridge-Newton metro area was $517,500. That limit was raised to $523,250 for 2016, according to LoanLimits.org.

The maximum insurable amount for an FHA home loan was also increased for 2016, and it now matches the conforming cap mentioned above. Between now and the end of the year, the FHA loan limit for a single-family home in the Boston metro area is $523,250. These limits are reviewed annually.

Local Home Prices to Increase 24% by 2020?

According to the real estate information company Zillow, home prices in Boston rose by double digits last year. The Zillow Home Value Index (ZHVI) for this area rose by 10.4% over the last 12 months or so. But the rate of appreciation could slow down in 2016 — the company has predicted a gain of only 2.9% over the next 12 months.

Related: Boston home prices hit new peaks

Despite a potential cooling trend, home prices in the Boston real estate market will likely continue rising for the foreseeable future (i.e., the next few years). A recent report by Standard & Poor’s estimated that home prices in the city could rise by 24% between now and 2020.

Disclaimer: This story contains forward-looking statements relating to the Boston housing market. Such statements were made by third parties not associated with the Home Buying Institute. The publishers of this website make no claims about future home prices or other housing-related trends.