There were Dickensian-sized great expectations for the housing market in 2016, with experts predicting some of the strongest sales in a decade. And, to this point, the housing market has succeeded where many a television show series finale has failed: It has lived up to the hype, but can it continue?
As realtor.com reports, total home sales are up 5 percent compared to the first half of 2015. Median existing home prices have increased another 5 percent in June, setting a new record, and this was the best spring selling season in a decade. But all good things must come to an end, and you shouldn’t expect the second half of this year to mirror the first half.
Part of what made buyers in the first half of this year’s housing market resemble sharks in freshly chummed water, was a large number of Millennials who finally began to become home owners. Regardless of age, everyone has been spurred by the near-record low mortgage rates.
Unfortunately, the market can only expand as much as supply allows it to, and we are very close to the limit of how fast inventory can turn over. Even with continued strong demand, home sales are likely to slow because there just aren’t enough of them to actually be sold. Additionally, mortgage rates are eventually going to increase, tempting fewer buyers along their march upwards.
But even with the housing market declining from what we have seen so far in 2016, it doesn’t mean the rest of this year and into 2017 will be bad. In fact, the real estate market should remain quite strong, thanks to a healthier economy, more jobs, lower unemployment, and higher wages.
