The housing market for the remainder of 2016 will look very much like 2015 as far as both existing-home sales and home price appreciation—and that foreclosure activity could return to “normal” levels as soon as the middle of next year, according to Ten-X Chief Marketing Officer Rick Sharga in a webinar this week.
Sharga predicted that by the end of the year, there will be an estimated 5.3 and 5.5 million existing-home sales as well as 550,000-600,000 new home sales. He also predicted home prices should rise between five and six percent which he says is higher than normal but down from the double-digit growth seen in previous years.
In regards to inventory, Sharga says Ten-X attributes weakness across the board to lackluster construction, underwater borrowers, and declining distressed inventory. Ten-X also states affordability for homebuyers may become a problem as prices continue to outpace wage growth, causing buying activity to slow down.
Household formation, according to Ten-X research, is slower than expected. Analysts believe a lack of starter homes, generational tendencies (such as millennials purchasing homes later in life than anticipated), and credit availability may skew numbers toward rentals.
The good news, according to Ten-X, is the foreclosure crisis is almost over and they don’t foresee another wave of foreclosures in the near future. Ten-X analysts do predict, however, that another recession could be coming as soon as 2019. They don’t feel, though, the potential recession would be nearly as severe as the previous one in 2008 because there is less risk built into the lending practices now.
Ten-X anticipates that foreclosure activity should return to normal levels by 2017 and could even dip below historical norms. Note sales by GSEs and the other major lenders are diminishing the number of distressed properties entering the market and these major lenders are accelerating that recovery. Finally, Ten-X states that it unlikely the housing market will hit a “full recovery” until 2018 at the earliest.