Last Updated on January 18, 2016
2015 was a very good year for real estate in the Carolinas – in fact, the second-best year ever for the Allen Tate Companies, with 21,594 closed sales and $5.16 billion in closed volume.
Buyers were ready to move, and sellers who were ready to sell saw a 6-7 percent price appreciation because of low listing inventory. Historically since the 1950s, appreciation has averaged around 3.5 percent annually.
I’m confident that in 2016, we’ll continue on a positive path and see steady, sustainable growth – the kind of price appreciation and sales that keep a real estate market healthy for the long-term. In the January-February edition of Carolinas Market Update, I take a look ahead at what we can expect.
In 2016, we’re going to see more homes listed for sale. The stock market is steady; homebuyers now understand home values; and those who have been steadily rebuilding equity are at a point where they can finally sell.
That said, Baby Boomers are really taking their time. They just aren’t downsizing as quickly as they approach and pass traditional retirement age as they have done in the past. This is clogging up the pipeline somewhat by disrupting supply and demand – which is keeping prices inflated.
This year, we’ll begin to see more land being developed and more lots and new construction available. While builders are now building features that buyers want, new construction prices are higher because land, labor and materials are all higher.
In December, the Federal Reserve finally took action that has been long-anticipated and raised rates. From that, I expect to see mortgage rates creeping up, to about 2 points higher than historic lows of just a few years ago. It’s certainly possible that we’ll see interest rates of 5.5 or even nearly 6 percent by year-end. Rising interest rates will push hesitant buyers, but may become a factor for homeowners who want to move, but currently have an interest rate below 4 percent.
Condition will continue to be a critical factor at all price points. Buyers want move-in ready homes and sellers many times are not willing to make major fixes and upgrades prior to sale. Homeowners need to understand that homes need to be constantly updated to stay current. What they tend to forget is that they can also enjoy these enhancements now – and recoup much of their investment later.
I’m bullish about 2016. Even if you are not quite ready to make a move, have a conversation with your Allen Tate Realtor and start this New Year off right. Let us help you make your best move!
CEO and President, Allen Tate Company