What to expect in this year’s housing market

jonathan wiggs/ globe staff

Well, 2016 is off to a better start than 2015. The final numbers are not in, but it looks like sales of condos and single-family and multifamily homes combined will come in at least 10 percent higher than in January 2015, according to the Multiple Listing Service (MLS). In addition to closed sales being up, the number of pending ones (new contracts signed) increased 13 percent. These statistics are the best indicator of what is to come in the months ahead, so the news is very positive.

If you plan to buy a home, there are several things you should know:

There were many very positive Mortgage Guideline changes in 2015 that aided the housing market and will help even more this year. These changes involve lower down-payment requirements on a variety of loan programs, including jumbo mortgages, that don’t require private mortgage insurance. There are additional mortgage changes under consideration as well: updated models that will bring more buyers into the market because the current system does not give credit for anything other than loans, credit card payments, and the like. They are evaluating a new system that would give consumers credit for additional reoccurring payments such as rent, utilities, and cellphone bills. The change is expected this year, and once the system is updated, it will really help those who can afford a mortgage payment but don’t have an established credit history. This will open up the market to a whole new pool of buyers.

There is also talk about loosening condo-purchase guidelines. After the mortgage meltdown in 2008, lenders set rules that are tighter than the restrictions for single- and multifamily homes, thanks to a large number of condo foreclosures. Well, the mortgage companies realized that they overdid it, so they are looking at different ways to make it easier again. It seems that somewhere between how it was years ago and how it is now is probably best.

If you plan to buy, there are several things you should know:

You will need to be patient; it’s still early, and the market isn’t filled with new inventory yet. But once you find a house that piques your interest, see it as soon as it’s available for showing. Notice I didn’t say as soon as you can? Buying a home is a serious undertaking, and you have to make time for it. If a home is listed on Wednesday, go see it on Wednesday night or Thursday; don’t wait until the weekend, when everyone else shows up. If you do, you’ll wind up competing with everyone else to buy it and probably pay more. You have to strike fast and strong. By strong, I mean with a real offer. Remember: If you see a house you love, you are probably not the only one who loves it.

January typically has the lowest inventory of the year. Since pending sales are up so much year to date, this January saw the lowest inventory since 2003. We expect it to rise earlier than it has in years past — and certainly sooner than it did last year during all the snow. Why? It’s partly related to a change in MLS guidelines that has reduced the number of days a home has to be off the market before it can be relisted from 90 to 60. More sellers who failed to find a buyer for their home last fall will relist sooner. This is a trend we are already beginning to see.

If you plan to sell this year, the sooner you list the better. The trick is to get on ahead of the mad rush in March and April. Selling a home is a competition, so why market your home when there are more competitors? When there are more buyers than sellers, there are bidding wars, and prices get pushed up. This happens in the late winter and early spring every year.

Last year was a good one for the housing market in Massachusetts. A total of 83,961 homes sold, a 9 percent increase over 2014. It was actually the biggest year for home sales since 2006. The average sale price of all three home types (single, multifamily, and condominiums) in 2015 was $381,841, 3.6 percent higher than the 2014 average of $368,542.

A look ahead

Every factor points to 2016 being another big year for the housing market. Interest rates are still low; mortgage guidelines are loosening; inventory is on the low side, keeping the supply under control and demand high; the economy in Greater Boston is booming; home equity is rising; and pride of homeownership is definitely back.

I expect the number of home sales and prices to increase at least 5 percent each this year.