We are only a few weeks into 2016, and already the housing experts are issuing their predictions for the Washington, D.C. housing market. In fact, the forecast “rollout” started at the end of 2015.
One notable forecast came from David Charron, president of the Rockville-based multiple listing service MRIS, which covers the entire D.C. metro area. Mr. Charron also writes an occasional column in the Washington Post about local real estate trends.
Here’s an overview of his predictions for the Washington, D.C. housing market in 2016.
Rising Mortgage Rates Likely in 2016
We are starting 2016 with a slight dip in mortgage rates. On January 21, Freddie Mac reported that the average rate for a 30-year fixed mortgage had dropped to 3.81%. That’s the lowest it has been since October of last year. But many industry watchers, including David Charron, expect rates to rise gradually throughout 2016.
“The increases will start off in small increments, so we don’t anticipate a sudden impact on the housing market,” Charron wrote in a recent Post article, “but it could make it more difficult for some buyers to qualify for a mortgage.”
Rising rates could affect the Washington, D.C. housing market in several ways. For one thing, it would reduce the buying power of home buyers. Costlier mortgage loans will force some people to shop within a lower price range. Additionally, the mere threat of rising rates could create a sense of urgency among buyers, leading to an upsurge in housing demand.
More Inventory Coming Onto the Market
Inventory shortages have affected the Washington, D.C. housing market for the last couple of years. The supply of homes for sale has been lower than needed to satisfy demand. This creates a highly competitive real estate market and drives prices north, two trends we’ve been seeing in the local market.
But we might see a better balance of supply and demand in 2016, all across the Washington, D.C. metro area. As Mr. Charron explained: “all the numbers indicate that we have finally turned the corner [on a shortage] with more homes coming on the market.”
The D.C. metro area housing market experienced a gradual growth of inventory during 2015, compared to the previous year. Each month, there were more homes listed for sale compared to the same month in 2014. This should give buyers more choices in 2016 with less competition. MRIS reports a 9.5% increase in the number of homes sold through most of 2015, compared to 2014.
At the time this story was published, there were 18,318 homes listed for sale in the Washington, D.C. metro area. That’s 2.5% higher than the same time last year — another sign of gradual inventory growth.
Increased construction activity is expected to bring more new homes onto the market in 2016, while rising home prices have put more homeowners in a better position to sell. These two factors combined could lead to a higher number of homes for sale in 2016.
Zillow’s Housing Market Prediction for Washington, D.C.
We’ve written about Washington, D.C. home prices in the past. Here’s a quick update. The general consensus among housing analysts today is that house values across the country will rise more slowly in 2016 than last year.
Mr. Charron shares this outlook. “Even though we expect prices to continue increasing, we don’t think there will be a sharp rise,” he wrote.
In January 2016, the real estate information company Zillow predicted that home prices in the Washington, D.C. metro area would rise by a mere 0.9% over the next 12 months. So we’re talking about a market that’s expected to be mostly flat in 2016, at least where home prices are concerned.
So there you have them, a handful of predictions for the Washington, D.C. housing market in 2016. If you’re interested in broader forecasts that cover the entire nation, check out this article.
Disclaimer: This story contains forward-looking statements from third-parties not associated with the Home Buying Institute. The publishers of this website make no claims or assertions about future real estate conditions, home prices, or other housing-related trends.