Happy new year to you all! We’ve made it through the first week of 2016 with flying colors, and this week POTUS will be giving us another State of the Union address, so I thought now would be would be as good a time as any to take a look all of the progress made in the housing market in 2015. After all, we’ve put in a lot of hard work this past year…let’s see that hard work pay off!
Let me start by saying this has been a prosperous year as a whole. We saw a lot of growth in our industry, and this growth spurt gives us a lot of hope that the market will continue to grow and flourish going forward. But the areas that grew the most may surprise you.
In general, sales were working their way up throughout the year across the board. That’s not only a plus, but is no surprise to anyone. The greatest growth came from new and existing home sales, with a 13% and 7% increase respectively. This is mainly a result of the newest 1.4 billion families and 210,000 jobs created this year. Lots of folks were first-time buyers and those relocating for a new job, both lovely reasons to see improvements to the industry. Due to this spike, home prices have increased 6% on average. And this, ladies and gentlemen, means home values are close to being fully recovered nationally.
The rise in value is due to simple supply and demand. There are lots of people looking for homes, but construction on new homes was limited to 900,000 new housing units, which is only 20% of the homes needed to cover all of these new families. Because there aren’t enough new homes, these families are renting, and that is keeping rent prices high. The concern is that higher rent won’t allow for these new families to save for a down payment and only those families with good credit are even in the running to purchase these new homes.
Interestingly enough, the areas that did slow down the most are distressed home sales, investors, and international & second-home buyers. Because so many of the new homes built were apartments, there really isn’t room for these clients in the existing market. But all in all, the market is much better off than it was a year ago. In order to perpetuate this growth, there needs to be new construction on affordable housing and access to more credit for those who can buy. If we continue this trajectory, we should be back to the way we were sooner than we thought. So here’s to creating a more prosperous year in 2016…I have a good feeling we are all going to be just fine.