INVESTAccording to the National Association of Realtors in 2013, there were 5.09 million existing-home sales nationally. In 2014, sales dropped by 3.1% to 4.93 million. Although final figures for 2015 are not yet available, N.A.R. predicted existing-home sales would close out the year at 5.3 million — nearly 7% higher than the previous year.

New home purchases and sales for California, on Friday, Jan. 24, 2014 were lower than predicted. Purchases of new homes in the U.S. fell more than forecast in December, ending the industry's best year since 2008 on a sour note. Rising rates will squeeze first-time home-buyers the most. The Fed’s move to increase interest rates in December 2015 reflects the major strides the U.S. economy has made as it emerges from the Great Recession. Higher rates (though they haven’t happened yet), along with rising prices and limited supply, will make it harder for some to afford a new home.
However, the good news: Long-term mortgage interest rates will see only a gradual increase this year and will remain relatively low compared with what they were before the downturn.

Thirty-year fixed-rate mortgages, which averaged a bit under 4% for most of 2015, will average 4.4% this year, according to Freddie Mac. Meanwhile, housing data firm CoreLogic, in its latest U.S. Economic Outlook latest report predicts that mortgage rates will increase roughly half a percentage point in 2016 over 2015. The NAR also predicts that even with mortgage rates rising, sales will modestly increase by 3% until the end of the year. That is good news for investors wanting to ad more affordable rentals to their portfolio as existing homeowners jump into the selling pool to take advantage of the small market increase. Low income first time buyers if not taking advantage of the lower rates now will end up continue to rent increasing the rental factors even higher.

If the Obama administration slower than desired job projections for 2016 stand, the boom will be for new household formations. This is a term referring to configurations of people who live together under one roof, a few roommates, new married couples, a nuclear family of four or young couples that moved in with parents during the recession. Many of them will be moving out of their parents residences, getting married or having children of their ow. The increase is predicted to continue during 2016 as 1.25 million new households are predicted to be formed. Excellent timing for investors to dive into the single family residence rental business as the demand for rentals in desirable areas and schools increases and rents will rise as a consequence.

For more information regarding adding single family residence investments in central California to your investment portfolio contact the Etchart Consulting Group directly at
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