2016 Montclair Homes Forecast

Following up our piece about 2015 last month, we go into 2016 and see that the year has begun with a pool of buyers chasing a limited number of homes.

When will buyers see more inventory come on? In the past 3 years, that time has consistently been late March – early May and again in September.

Increased inventory is helpful to buyers insofar as they aren’t competing with an expanding pool of buyers.  The difference between new listings and houses going under contact should point to opportunity for buyers. In Spring 2015 we saw a more stable relationship between listings and buying versus spikes in 2014 and 2013. I expect a more consistency and stable inventory vs buying starting in March.  In all years we saw inventory spike in September followed by buying in October.

Buyers ready to commit in September should see some opportunity.

Mortgage rates vs prices

Mortgage rates were consistently low across 2015.

What effect would rate increases have on prices?

The average price of a home sold in 2015 was $676,000; a $2,505 mortgage payment based on current 30 year rates of 3.75% and 80% financing. An increase in rates to 4.5% would drop the buying power to a $618,000 for the same $2,505 and an increase to 5% would decrease prices to $583,000.

How likely are rate increases?

A significant rate increase seems unlikely given current economic uncertainty and the uncertainty of an election year.  There is some tradeoff, however, as the same uncertainty and equities market stagnation also gives buyers some pause.  We have seen specific cases of buyers holding off on purchases for these reasons.

Do you have questions now about how best to position yourself in 2016?

Give me a call or email me today. I am happy to help.

Rich