It is that time of year again. The time of year when the real estate industry tries to prognosticate what the housing market will look like for the new year. Here are the best (and maybe the worst) predictions for 2016:

Home prices will rise more slowly in most U.S. cities: Over the last couple of years, we have seen home prices rise rapidly in many parts of the country. This was often the result of a supply and demand imbalance. In many large metro areas, there were plenty of home buyers on the market but not enough homes to meet demand. Prices tend to rise rapidly under such circumstances.

In July of 2015, the financial data company CoreLogic issued a forecast for the U.S. real estate market that predicted a 4.7% rise in national home prices through July 2016.

The biggest home-price gains will continue to be in the West: In 2015, some of the biggest home-price gains occurred in the western part of the nation. Cities in Colorado and in California experienced double-digit gains in property values. Denver and San Francisco, for example, both posted year-over-year gains of +10%.

These markets could experience some cooling in 2016, but many housing analysts expect that the biggest home-price gains will continue to occur in these western markets.

Mortgage rates will rise later this year and into 2016: At the end of 2015 the average rate for a 30-year fixed mortgage averaged 3.85%. The 30-year average has been hovering at or below 4% for most of 2015.

In the fall, Freddie Mac (the government-regulated buyer of mortgage loans) issued a housing market prediction for 2016. In it, the company’s chief economist forecasts that the average rate for a 30-year fixed home loan would gradually rise to 5.1% by the end of 2016.

If rates do start to rise gradually this year, we could see a slight reduction in home-buying activity, but this could be offset by continued improvements in the job market and broader economy.

Job gains will bring more home buyers into the market: Since 2014 the U.S. gained about five million jobs, according to Doug Duncan, chief economist at Freddie Mac. This means there are more people in a position to buy a home which could lead to a demand for housing.

On top of that, many cities across the country are still suffering from a shortage of homes for sale (relative to demand). This supply-and-demand imbalance could continue to push home prices up in 2016, as buyers compete for limited inventory.

Student loan debt will keep many Millennials out of the market: Accord-ing to a recent analysis by the Federal Reserve, outstanding student loan debt now totals more than $1 trillion and it is keeping many would-be home buyers from entering the market.

Student loan debt can create additional hurdles for mortgage shoppers in a couple of ways. For one thing, it increases the borrower’s total debt-to-income ratio, which can cause problems during the underwriting and approval process. Additionally, excessive debt can lower a person’s credit score. All of this makes it harder for debt-burdened Millennials to qualify for home loans.

Is student loan debt going to be the next big financial crisis for the U.S.? We will have to wait and see, but in the meantime, it will almost certainly affect the housing market.

Please note – This article offers a collection of real estate market predictions and forecasts for 2016. Such forward-looking statements should not be viewed as facts or financial advice. They are the equivalent of an educated guess. As with any prediction, there are no claims, assertions or guarantees regarding the U.S. housing market in 2016. 

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