There is nothing better to motivate potential home buyers off the fence and into a home ownership than the first sign of raising interest rates. Right here and right now, in the midst of holiday season the Federal Reserve board puts the interest rate up .25%. Not a big jump that would scare the would-be home buyer sending the real estate market into free fall again; but the first rate increase in nine years. This is inevitably the start of an upward rates climb. Yes, we have hit bottom and are heading up.
Expect to see interest rates on home purchases 1 % higher by this time next year. The housing market has been very cautious over 2015. Sellers have been watching home prices increase at a slow pace so they have been reluctant to jump (back) into the market. Many sellers may have just gotten their head above water as their homes values begin to right themselves. On the opposite side of the fence Buyers have been put off by the stringent loan underwriting rules that have been put in place after the housing crash. With many first time buyers (incorrectly) believe they can qualify for a loan. Metro Atlanta available homes for sale have remained at all-time lows with only the bigger builders taking the risk to develop and build.
Will 2016 be a boom year for the real estate industry? Will existing home owners come to market or will it be another year of record profits for
Home Depot with home owners staying put and making improvements and extensions to their existing homes? Only time will tell.
By Paul Stewart