We continue to have great optimism about home sales in 2016 despite the storm of the century just a few short weeks ago. We are experiencing a mild winter and agents are building momentum into the spring market making this a great time to buy or sell a home. Interest rates are phenomenal despite the Federal Reserve raising their rates.
Inventory levels are below last year’s level year-to-date and the great news is, sales are up. We have pent up demand for housing in Northern Virginia which can be seen when visiting open houses on weekends and our listings are getting great activity throughout the week. Today’s buyers are serious and are taking action on homes that are staged well, in condition and priced right. In many cases, we are seeing multiple contracts.
In looking back at 2015, through November, sales of both new and existing homes had increased over the previous year. According to a recent release from the Department of Commerce, new home sales in 2015 came in at 490,000—the best numbers since August of 2015. We expect these numbers to increase throughout 2016 as well. Builders have expressed multiple times they are optimistic as well.
Basic information on the economy shows us that unemployment is at a 7-year low, wages are 5% higher than a year ago, and home prices continue – moderately. Let’s hope this trend continues as we definitely need higher paying jobs in our area.
One area of potential concern today is in the refinance boom of 2005-2007. During this time, many borrowers took out 10-year mortgages that were interest only and their reset dates are now coming into maturity. This means their loan balance is now amortized over 20 years for the last 20 years of the loan increasing their monthly payments significantly. Add to this potential issue is many of the homes used to collateralize these loans have not gotten back to the value of where they were making it difficult to refinance again. This could result in short sales and foreclosures. Let’s pay attention to how this plays out.
As you know, if you have any questions or concerns, you can call, text or email me anytime. We are here to help you.
Happy Valentine’s Day!