Exclusive Buyer Agents Predictions for 2016 As compiled by the National Association of Exclusive Buyer Agents March, 2016
What is 2016 going to bring for real estate buyers? While no one has a crystal ball, the National Association of Exclusive Buyer Agents asked its members what they believed buyers would face this year. Exclusive Buyer Agents across the United States, regardless of their local market, wrote that real estate buyers should plan to face a number of challenges in 2016. These challenges include: Lack of Inventory, Increasing Prices, and Economic Uncertainty. The one bright spot in the survey was an expectation that interest rates will likely remain low. What does this mean for buyers? According to the NAEBA Executive Director Kimberly Kahl, CAE, It may be more important now than ever that they receive full representation from their real estate agent. They will need an experienced agent who will help them make a good offer quickly or they will lose out on the home they want. They will also need an experienced negotiator to ensure they don t overpay for the home, especially in this climate of increasing prices and economic uncertainty. EBA 2016 Predictions Page 2 of 6
Low Inventory Markets of course vary throughout the country but in our area the real challenge is lack of inventory, especially in resales. Builders are starting to catch up a bit but lots are very small and people are questioning some of the finish products being used. It would be nice to have some more inventory! Lack of inventory and competition from other buyers for the quality homes. In our market we are low on inventory in some areas. I think there will be a small slowdown in sales in the Sarasota area because of lack of inventory. Many sellers may still be "under" (owe more than they can sell for). The low inventory is a big problem. It's looking like it's going to be a competitive year for buyers in San Diego. Low inventory and strong demand. The big challenge in our market will be the shortage of inventory. There are many more buyers than there are great properties, and that is always frustrating for a company like ours that is always loyal to home buyers. In my area, lack of inventory will continue to be a problem. Buyers will be competing in a very competitive market North of Boston. They will have to outsmart other buyers not only in price but in creative terms and concessions. Now more than ever they will need exclusive representation. If the interest rates jump up it may level the playing field somewhat but lack of inventory will still drive bidding wars. In the suburbs there is more inventory but going quickly. The seasonal inventory will be equal, or below, last year. Since inventory started to decline around April 2015, we will remain in a market that favors the seller. In our market the challenge is going to be having enough listings. We are at a five year low for listings and the buyers are out there, but very little to show them. Tough market with lack of in inventory Hard to find a house, and when they do they may have to fight for it. Getting a down payment AND having money for your own closing costs will be a huge advantage. Low inventory and crushing demand mean most sales will be bidding wars, over asking prices, and giving up some buyers rights. My area and most of the USA is in a very bad sellers market. Prices skyrocketing and inventory levels are at record lows. Both housing inventory is going down while demand remains strong. EBA 2016 Predictions Page 3 of 6
There are certainly new challenges as inventory, mechanicals, wells & septics continue to age in New England. In my market the challenge is too many buyers and not enough listings. We've got bidding wars. Inventory shortages. The biggest challenge has been the increase in prices, decrease in inventory, and less room for negotiations. In the DC metro area, looks like we're going to have a competitive market with multiple contract offerings. The challenge is finding the right fitting home and acting quickly by being active in searching. There will be challenges for buyers due to low inventory. The market in our area (Northern CA) is still very short on inventory on the entry level price point ($500K to $750K -- Sonoma County to Marin County, resp.). This results in multiple offers and sales generally occurring at over asking prices. But in the more mid-range price point, the inventory is starting to move toward a balance with the number of buyers and property values are flattening. Lack of inventory is still a challenge here. I foresee increasing challenges between the disparity of pricing between what is being built in new construction in our area, and low available resale inventory. I have Buyers ready to buy, with no properties to sell them currently, and I fear this will get worse before it gets better. My biggest challenges are low inventory, affordability and artificially inflated prices/low appraisals. In our market low inventory, but great rates!! Rising Prices I don't believe prices will be going down in 2016. I think they will steadily rise. I think investors will consider real estate less volatile than the stock market and we will see more fix and flips in 2016. Prices are increasing so those "good deals" are hard to find. I think it will be a lot like 2015 and 2014...ups and downs constantly with activity with prices gradually increasing and when the whole year is reviewed...a slight step upward and forward...but forward. It will be more difficult for buyers to find affordable properties. So...multiple offers, lots of offers, prices rising. So it's going to be another challenging year. Buyers will still buy, but they won't get the deals they were used to getting a few years ago. Rising prices. EBA 2016 Predictions Page 4 of 6
We expect a slow and steady rise in home prices as the spring kicks into full swing. As the entire country seems to be in re-bound mode from the housing debacle, deals are getting harder to come by and prices are rising. Prices are still rising and pricing the first-time homebuyer out of the market for now. Economic Uncertainty Honestly, with what is going on with the political campaigns, I'm not sure what the rest of 2016 will bring for real estate buyers. I've had a slowdown in inquiries and am wondering if people are waiting to see where this country is going before making a decision to buy or move. The buyers I am working with seem more hesitant and uncertain, without sharing what is making them so. Since I never discuss politics with buyer-clients, and won't start now, I can only conjecture. We are very cautious in our financial planning for 2016. An election year, the turmoil in the Middle East, and local terrorists threats, national debt all are disturbing. I feel that since it is an election year some people sit tight until they have a sense of the direction the country is moving in. It will be interesting to see if there are any effects of an election year that will slow the activity later in the year. This is going to be a scary political year...lots of people may put moving on hold... Some people may put off buying until after the presidential election. With an unstable political arena, and a slow-growth economy, buyers will face some challenges. With a volatile and erratic Wall Street, and sellers pricing overly aggressively, I feel there will be CHALLENGES. There is a great deal of hesitation by buyers to buy in light of the upcoming election, the stock market issues, and all the press about rates and the housing bubble. Buyer confidence will depend on both the global and national economy which is still not stable and true, low unemployment numbers. There is uncertainty with the stock market, the economy, the election, etc. which certainly doesn't help. Continued Low (But Possibly Rising) Interest Rates Rates are very low. Yes. Right now, low interests are still an incentive for strong and steady sales this year. EBA 2016 Predictions Page 5 of 6
Interest rates: So far the rates eased up from just over 4% on January 1st and slowly declined to 3.5% but then they have gone back up to 3.75%. I expect interest rates to rise this election year to the mid 4's but if rates approach 5% or higher it will have a dampening effect on home buying - especially the "mental" aspect of the home buyers. This year will be the year of regret, meaning would-be buyers will look back on 2016 and think, "If I had only bought that house or piece of property." They will bemoan the higher interest rates and the steeper prices. This year is likely the end of the window of opportunity that has existed for the past half dozen years. One that won't likely repeat itself in most of our lifetimes. As interest rates are at historic lows, we can expect to see upward pressure continue throughout 2016. The only triumph may be low interest rates which in the long run doesn't help the economy. The mortgage rates are still very favorable. Interest rates are still very good so it should be another good year. EBA 2016 Predictions Page 6 of 6