A lot of housing experts and economists are expecting the Gulf Shores housing market recovery to gain steam in the new year. But three big factors could still derail the whole ball of wax!
Biggest Threats to the Gulf Shores Housing Market
1. Incomes Not Keeping Pace – Despite a much rosier outlook for jobs, incomes are still not keeping pace with Gulf Shores housing market prices. And that could make it hard for buyers to afford homes in the areas they want to live in. Income is not rising fast enough and affordability is a growing obstacle to homeownership.
2. Lenders Too Skittish – Mark Zandi of Moody's Analytics says, the key risk to the Gulf Shores housing market recovery is still the difficulty many potential homebuyers have getting mortgages.
Even though Fannie Mae and Freddie Mac recently eased lending standards, it doesn't mean lenders are going to take it easier on borrowers. In fact, many lenders may still be too nervous to lend to borrowers who don't have near perfect credit or large cash down payments.
In addition, former homeowners who lost their home to foreclosure may have to overcome damaged credit histories financial burdens brought on by the recession. Meanwhile, Millennials who might be looking to buy have short-lived credit histories and heavy debt loads from student loans to contend with.
3. Sharp Increase in Mortgage Rates – While Fannie Mae doesn't expect to see a sharp jump in mortgage rates, the Federal Reserve could surprise everyone and send its benchmark rate higher than it's projecting.
The Fed is uncharted territory, and if it pushes rates up, it could have a big impact on the market.
Stan Humphries, chief economist for Zillow, said if rates climbed to 6%, it would mean home buyers in some markets like the Gulf Shores housing market would be spending more than half of their income for housing.
That would probably mean home prices would have to come down to more affordable levels or sales would slow to a crawl.
Other factors not even part of our 3 biggest threats to the Gulf Shores housing market include foreign buyers and investors. What happens if they all stop buying, which is starting to happen in some parts of the country.
Stay tuned, we'll keep you updated on Gulf Shores real estate throughout the coming year. Find more Gulf Shores housing market news to your right under our Gulf Shores Real Estate Categories. And don't forget, we post daily tips on Facebook and Twitter. Be sure to check us out there as well.