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.

Forecast: Will the Miami Housing Market Flatline in 2016?

Home prices in South Florida have risen steadily over the last couple of years, with new construction ramping up across the area. Now, some are worried the Miami housing market could be headed for another crash. The dreaded ‘B’ word — bubble — is being tossed around again, as well.

Some economists have forecast that home prices in the area will remain mostly flat in 2016, after many months of steady growth. Here are some notable real estate trends and predictions for the Miami real estate market in 2016.

Miami Real Estate Market to Crash in ‘Next Few Years’

In an interview with The Washington Post, Miami real estate expert Jack McCabe said that the South Florida housing market could be headed toward another bubble-and-bust cycle, possibly within the next few years. He cited rapid construction as one of the leading factors in this prediction.

“Every [real estate] project is getting approved again,” McCabe told The Post back in August. “Particularly in the luxury-condo sector, there’s going to be a crash in prices in the next few years.”

The South Florida real estate market has been on fire in recent years, outpacing the rest of the nation where home prices are concerned. In the Miami area, house values rose 13% at the end of 2013, compared to the same time a year earlier. But while home prices are still rising in this housing market, they appear to be slowing.

According to the real estate information company Zillow, home prices in Miami rose more than 7% over the last 12 months (as of January 2016). Looking forward, however, Zillow forecasts that home values in the area will fall by -1.6% over the next 12 months. This is based on their proprietary “Zestimate” method for tracking house values over time.

Historically speaking, a major deceleration in price growth is an ominous sign for the Miami and broader South Florida housing market. The last time home values cooled this rapidly (toward the end of 2005), a plummet was right around the corner.

Housing Inventory on the Rise for a Change?

Supply and demand are playing a big role in Miami’s current housing market trends — as always. A few years ago, investors poured into this market and snatched up enough homes to create an inventory shortage. There just weren’t enough properties for sale in those days, so home buyers had to compete fiercely with one another. This led to ever-increasing offers and sale prices.

But the inventory situation seems to be changing. While it remains tight in some parts of South Florida, housing inventory is no longer “shrinking.” In fact, the trend might be reversing. According to Realtor.com, the total number of homes listed for sale in the Miami metro area rose 3% in December, compared to a year earlier. Of course, this should come as no surprise to anyone who actually lives in Miami, where condominium construction is happening everywhere you look.

The bottom line is that there are more homes coming onto the market today, and this will eventually tilt the supply-and-demand scales in a way that slows appreciation. And this is good news for Miami home buyers. After all, this is one of the least affordable housing markets in America.

Disclaimers: This story includes forecasts and predictions for the Miami real estate market in 2016. Such forward-looking statements were provided by third-party individuals not associated with the Home Buying Institute. Third-party data are deemed reliable but not guaranteed. The publishers of this website make no claims or assertions about the Miami housing market in 2016.

Introducing the Top 10 Hottest Housing Markets of 2016

Housing analysts and economists have predicted that U.S. home prices would increase by around 3.5% during 2016. But some local housing markets will exceed this average forecast and post even bigger gains. The real estate information company Zillow recently ranked what they feel will be the ten hottest housing markets in 2016. Denver, Seattle and Dallas topped the list.

What Makes a ‘Hot’ Housing Market?

To create its top 10 list of the hottest housing markets, Zillow reviewed their proprietary home value forecast for cities and metro areas across the U.S. They also looked at recent income growth, local employment trends, and other factors that contribute to overall market health. These contributors were “scaled and combined equally to form a hotness score,” said the company.

Top Top 10 Hottest Markets of 2016

Based on their forward-looking analysis, Zillow created the following list of the top 10 hottest housing markets of 2016:

  1. Denver, Colorado
  2. Seattle, Washington
  3. Dallas-Forth Worth, Texas
  4. Richmond, Virginia
  5. Boise, Idaho
  6. Ogden, Utah
  7. Salt Lake City, Utah
  8. Omaha, Nebraska
  9. Sacramento, California
  10. Portland, Oregon

Here’s an overview of what’s happening in the top three markets on this list.

Denver Home Prices Rise Into Uncharted Territory

It’s not surprising to find Denver included in a forecast of hottest housing markets for 2016. The Mile-High City has generated a slew of real estate-related headlines in the last few months.

In 2013, home prices in the Denver metro area rose above the previous record set during the housing bubble. And they’ve been rising steadily ever since. This housing market is now moving into uncharted territory, where house values are concerned.

Related: Denver sees double-digit price gains

While home price appreciation seems to be slowing in this metro area, Zillow expects to see a gain of around 5% during 2016. “Neighborhoods in Aurora, CO — Delmar Parkway, Highline Villages and Centretech — are the hottest,” the company said. “Denver’s Ruby Hill is also among the metro’s hottest ‘hoods.”

Seattle Real Estate Market #2 on the Hotness Scale

Seattle was one of the hottest housing markets of last year, in terms of price gains. The economists at Zillow expect this trend to continue through 2016 as well. They’ve predicted that the Zillow Home Value Index (ZHVI) for this metro area will rise by 5.4% over the next 12 months or so.

Seattle’s housing inventory — measured by the number of homes listed for sale — has declined over the last year. This comes at a time when demand is on the rise. Home buyers in this housing market are now competing fiercely for a limited supply of properties, and it’s driving prices north. Thus, Seattle was ranked #3 on the list of hottest housing markets for 2016.

Dallas-Forth Worth Sees Double-Digit Gains

What can we say about the Dallas real estate market we haven’t said before (like yesterday). Home prices in the Dallas-Fort Worth metroplex rose by double digits last year.

The area’s strong economy and bustling job market attracts people from elsewhere in the state, and from across the country. This in turn boosts demand for housing, at a time when supply is tight. (It’s that old supply-and-demand story again.)

Zillow ranks Dallas as the third hottest housing market for 2016, and predicts that the median home value for this metro will rise by around 5.6% year-over-year. Holford, Oak Lawn and M Streets are the hottest neighborhoods, the company said in a statement earlier today.

Buying Later in 2016 Could Be More Expensive

Most, if not all, of the housing markets on Zillow’s top 10 list share something in common. In these metro areas, demand for homes has outgrown the available supply. This forces home buyers to compete for limited inventory, which results in higher offers and sales prices.

As a result of these trends, home buyers who postpone their purchases until later in 2016 could end up paying more for a house. And when you combine that with the very real threat of rising mortgage rates, it creates a strong sense of urgency among home buyers.

Disclaimers: This story contains forward-looking statements about home prices and other real estate trends. Such statements were provided by third parties, and as such they don’t necessarily reflect the views of the publisher. The Home Buying Institute makes no claims or assertions about future home prices, or about which metro areas will be the hottest housing markets in 2016.

2016 Forecast: Dallas Real Estate Market to See Steady Appreciation?

The Dallas residential real estate market grew by leaps and bounds in 2015, with home prices rising by double digits across the metro area. Economists have forecast additional gains in 2016, through they might only be in the single-digit range. Here’s the latest forecast for the Dallas-Forth Worth real estate market in 2016.

Dallas Real Estate Market Red Hot, Says Realtor.com

Every month, the housing analysts at Realtor.com create a ranking of the “hottest” real estate markets in the U.S. (particularly among major metros). The rankings are based on supply and demand indicators and other factors that relate to the local housing market.

In December, Dallas showed up in the #4 spot on Realtor.com’s list of hottest real estate markets. It moved up one spot from November, when it was ranked at #5. In the latest report, Dallas was outranked by only three other U.S. cities (all of them in California) — San Francisco, San Jose and Vallejo.

Houses tend to sell more quickly in these hot markets, compared to other cities across the country.

According to the company: “homes [within the top-ranked cities] move off market 29 to 51 days more quickly than the rest of the U.S., and they have also seen days on market drop by a combined average of 15% year over year.”

Forecast for 2016: Much Smaller Gains?

Looking forward, most forecasts for the Dallas real estate market in 2016 suggest that home-price appreciation might slow down, as supply and demand strike a better balance.

The economists at Zillow are among those who expect a cool-down within the Dallas housing market. According to their proprietary “Zestimate” model for measuring property values, home prices in Dallas rose by 16% over the last 12 months. Looking ahead, they have forecast a gain of only 6.1% over the next 12 months (as of January 11, 2015). That’s still a significant gain — but nothing like last year.

It’s also worth noting that home prices within the Dallas real estate market rose to all-time highs at the end of last year. That means local house values have never been higher than they are right now, not even during the housing bubble. And they’re expected to rise even higher through the end of 2016.

There are several reasons for the unprecedented price growth in Dallas, Texas:

  • Like many Texas cities, Dallas was largely shielded from the devastation of the housing market collapse. Prices were never really over-inflated to begin with, so they didn’t have far to fall when the national real estate market crashed.
  • Dallas has a strong local economy with an employment rate higher than the national average. This attracts job seekers from other areas and puts more people in a position to buy a house. It also boosts consumer confidence.
  • Housing inventory is still tight in this market. In short, there aren’t enough homes listed for sale to meet the current level of demand.

These and other trends are putting upward pressure on local home prices. That’s why most forecasts for the Dallas real estate market in 2016 are calling for additional gains.

Disclaimer: This story contains forward-looking statements regarding local housing conditions. Such statements were made by third parties not associated with the Home Buying Institute. Real estate forecasts are the equivalent of an educated guess and should not be viewed as facts. We make no claims or guarantees about future house values or other housing-related trends.

Riverside-San Bernardino Housing Market Could Benefit from Job Growth in 2016

Here’s a prediction for the Riverside and San Bernardino housing market in 2016. Strong job growth over the last year or so will bring more home buyers into the real estate market, and this in turn will boost local home prices during 2016.

And that’s not just me talking. This is the general consensus among a number of housing analysts and economists. The most recent forecast for this area came from Lawrence Yun, chief economist for the National Association of Realtors, who cited the area’s strong job growth.

Read: California to have the hottest markets in 2016

Job Gains Bring More Home Buyers Into the Market

In a January 7 article for Forbes.com, Mr. Yun pointed out that Riverside, California has experienced significant job growth over the last 12 months, and that such growth often paves the way for real estate market gains.

After all, a strong job market puts more people in a position to buy (and afford) a home. And that’s the trend we are seeing across much of Southern California at the start of 2016, but particularly within the Inland Empire that includes Riverside and San Bernardino.

According to Mr. Yun, “the candidates that are among the top performers in regards to both rising home sales and home prices will generally be out West … Riverside [California] will likely experience a good year.”

The nation as a whole has experienced some job growth over the last year — about 1.9% from November 2014 to November 2015. But some metro areas have exceeded the national average. Riverside is one of them, having posted a 3.5% rate of job growth during the same 12-month period. This and other trends could boost the Riverside and San Bernardino housing markets in 2016.

Riverside Home Price Forecast: Another Good Year in 2016?

According to the real estate information service Zillow, home prices in Riverside, California rose by 5.7% over the last 12 months or so (as of January 2016). Their forward-looking prediction calls for another 5.6% increase over the next 12 months.

In this regard, the Riverside housing market seems to have bucked the national forecast for price cooling.

The general consensus among economists is that home prices nationwide will rise more slowly in 2016, compared to last year. But Riverside and other high-performing California real estate markets could be an exception to the rule. Such markets could easily outperform most other metro areas in 2016, in terms of home prices and sales gains.

San Bernardino Housing Market Also Looks Strong

Zillow offered a similarly strong prediction for the nearby San Bernardino housing market. By their estimation, home prices in and around the city will rise by around 6.7% in 2016. (This is based on their proprietary “Zestimate” method for measuring house values.) That’s much higher than the forecasts that are being offered at the national level — another testament to the rapid growth of the Inland Empire real estate market.

Here again, job gains play an important role. According to the State of California Employment Development Department, the Riverside-San Bernardino-Ontario metro area gained more than 46,000 jobs during the 12-month period from November 2014 to November 2015. This sets the stage for more gainfully employed home buyers in 2016. Increased housing demand should put upward pressure on home prices, especially if it grows faster than supply (which is entirely possible).

Disclaimer: This story includes third-party predictions and forecasts from individuals not associated with the Home Buying Institute. The publishers of this website make no assertions or claims about the Riverside or San Bernardino housing markets in 2016.

Denver, Portland and San Francisco See Highest Home Price Gains in October

The latest release of the S&P/Case-Shiller Home Price Index was published yesterday. According to the report, house values across the country rose by 5.2% in October, compared to the same month last year. Denver, Portland and San Francisco saw the biggest home price increases, posting double-digit gains yet again.

“San Francisco, Denver and Portland continue to report the highest year-over-year gains among the 20 cities with another month of double-digit price increases of 10.9% for all three,” said the report.

So what’s going on in these three housing markets? Why are house values rising so much faster in these cities? There are influencing factors on both the supply and demand side of the equation. But it really comes down to one thing: There aren’t enough homes available to meet demand, and it’s pushing prices north.

Economist Calls Denver a ‘Hot Location’ in 2016

Earlier this month, the Denver Metro Association of Realtors (DMAR) reported that the number of homes for sale in Denver is still near a record low, despite a slight increase in recent months.

Related: New price peaks in Denver and Portland

Svenja Gudell, the chief economist at Zillow, recently cited the Mile-High City as one of several housing markets where tight inventory is driving major price gains. “Denver, Seattle, Dallas/Fort Worth and Portland, where inventory has been declining in the last year and demand continues to rise, will also be hot locations in 2016.”

In short, there are plenty of people in the market to buy a home in Denver, but not enough homes to go around. So buyers are making strong offers, even when properties are already listed for top dollar. This is creating upward pressure on house values across the board.

It’s worth noting that the inventory crunch in this housing market is price-specific. Inventory is tightest toward the bottom of the pricing spectrum, particularly for “starter” homes. In the high-end luxury market, on the other hand, buyers have more options to choose from.

“There is almost sixteen months of inventory in this price point which strongly favors the luxury buyer,” said Nicole Rufener, a member of the DMAR market trends committee.

Inventory Tight in Portland Housing Market

Home prices in Portland also rose significantly during the last year. And here too, inventory has a lot to do with it.

According to Realtor.com, the total number of Portland homes listed for sale dropped by nearly 25% over the last year or so (Nov. ’14 – Nov. ’15). That’s a major inventory reduction, and it’s forcing buyers to compete fiercely for a shrinking pool of properties. Home prices typically rise during such supply-and-demand imbalances, and that’s exactly what we are seeing with Portland home prices.

While housing inventory has grown slightly in recent months, it is still well below what’s considered a healthy or balanced level. This means the Portland real estate market currently favors sellers over buyers.

Here’s how Matthew Gardner, chief economist at Windermere Real Estate, explained it to the Oregonian:

“Although improving modestly, the Portland housing market remains remarkably tight with only two months of inventory currently available to sellers. That’s still well below the 4 to 6 months we would normally see in a more balanced market.”

According to Zillow, home prices in Portland rose by more than 14% over the last year or so. Their economists predict that house values will rise by an additional 5% during 2016. This is based on their proprietary “Zestimate” method for measuring property values.

Home Prices Rising Rapidly in San Francisco

What can we say about the San Francisco housing market that we haven’t said before. It’s one of the hottest residential real estate markets in the country right now, and this trend will probably continue well into 2016.

Housing inventory in San Francisco has fallen steadily for the last few years. And according to at least one measurement, it continues to drop. Realtor.com reports a 2.2% year-over-year decline in S.F. homes listed for sale (when measured from November ’14 – November ’15).

Earlier this week, Realtor.com published a list of the hottest housing markets for the month of December. Their rankings are based on various factors of supply and demand. San Francisco topped the list for the second month in a row, followed by nearby San Jose.

Here Are HBI’s Top Five Tips for First-Time Home Buyers in 2016

The housing market has changed dramatically over the last few years, swinging from boom to bust and now entering a full recovery. It’s a lot to keep up with. So let’s do a little catch-up. Here are the Home Buying Institute’s top five tips for first-time home buyers in 2016.

Top 5 Tips for First-Time Home Buyers in 2016

Loan limits have been revised. Mortgage rates are expected to climb. Home prices are leveling off in many cities across the U.S. These are just a few of the ongoing trends that are “baked” into our list of tips for first-time buyers.

1. Consider buying sooner rather than later, to save money.

The Federal Reserve recently raised the federal funds rate for the first time in seven years. Most economists expect home loan interest rates to rise gradually in 2016, partly as a result of the Fed’s policy shift. This is something home buyers will want to keep an eye on.

The economists at Freddie Mac recently predicted that 30-year mortgage rates would climb to around 4.7% by the end of 2016. They 30-year average is hovering around 4% right now, so that would be an increase of about 70 basis points (0.70%) over the next 12 months or so.

Home prices are another factor creating urgency among buyers, as we head into 2016. While home-price appreciation is expected to slow in many cities during 2016, that doesn’t mean it will stop entirely. It’s likely that house values will continue inching upward next year.

Tip for first-time buyers: There is no way to predict the future, in terms of mortgage rates and home prices. But the educated guess right now is that both will rise throughout 2016. So buyers who put off their purchases until later in the year could potentially pay more for a home and a mortgage.

2. If you’re planning to use a mortgage, check out the new loan limits.

New loan limits were introduced in November and December, for both FHA and conventional mortgage loans. For the most part, the 2015 limits were carried over to 2016 with no changes. But in 39 counties across the U.S., conforming loan limits will increased in 2016. Additionally, FHA limits went up for 188 counties across the nation where home prices have risen sharply.

Tip for first-time home buyers: If you’re planning to use a mortgage loan to buy a house in 2016, you’ll want to review the new limits for your county. You can find FHA and conforming loan limits for every county in the U.S. on LoanLimits.org.

3. Research your local housing market with an eye on sale prices.

First-time home buyers sometimes have unrealistic expectations. They want to check every single box on their wish lists, even when their budgets fall short. This leads to frustration and heartache. It can also cause problems during the negotiating stage.

These problems can be avoided with a bit of homework. Before you start house hunting in 2016, spend some time researching home prices. Visit property websites like Trulia, Zillow and Realtor.com. Zoom in on your local market and look at recent sales prices. This is the best indicator of what you can get for your money.

Tip for first-time home buyers in 2016: Shopping for a home without knowing the market is like going into a business meeting with a blindfold on. That’s no way to handle a major investment. Read everything you can find on local housing conditions, home price trends, market leverage, etc. Be a well-informed house hunter!

4. Get a budget on paper, before you go any further.

Pop quiz. How much of a mortgage payment can you afford to pay each month? If you don’t know, you’ve got some homework to do. All too often, first-time home buyers rely on their lenders for budgeting advice. But that’s something you have to determine for yourself, and it’s best done early in the home buying process.

Most financial advisors recommend that you spend no more than 28% of your monthly income on housing costs. Another rule of thumb is to keep your total monthly debts (including the mortgage and everything else) below 36% of your gross monthly income. Statistically speaking, this is a manageable level of debt for most people.

First-time buyer tip: The numbers above are just guidelines. Your budget should be fine-tuned to match your financial goals, spending habits, and comfort zone. So feel free to deviate from the “rules” if needed.

5. Check your credit score to see where you stand.

Credit scores are a big deal for mortgage lenders. When you apply for a home loan, the lender will review your credit score to see how you’ve repaid money in the past. That’s what this three-digit number shows — it’s a direct reflection of your previous borrowing history.

Lenders have different standards for credit scores. So there’s no single number that will make or break your chances of getting approved. Generally speaking, a FICO credit score of 620 or higher will put you in a good position to buy a home, while a score of 750 or higher could help you qualify for the lowest interest rates. But here again, the numbers are not set in stone.

So there you have them, our top five tips for first-time home buyers in 2016. In closing, I leave you with one final tip. If you want to stay informed about housing conditions across the U.S., follow us on Twitter.