Oil price and market fluctuations upset housing sector

Posted: 2/01/2016

The recent downfall in the oil industry has added a degree of difficulty in forecasting where the housing market is headed for 2016. With the recent drop in oil prices, many communities who have been dependant on the oil industry for jobs have been seeing major layoffs, which have had a negative impact on home prices. To complicate things further, the recent increase of interest rates by the Federal Reserve and weak growth in the fourth quarter of 2015 is stoking concerns.

What will this mean for home prices? Most economists agree that the economy will continue to slowly grind along and improve, but won’t see any spectacular growth. California should see a sustained level of consumer confidence, with a major downturn in home values unlikely.

A recent report by Fitch Ratings has indicated that California and Texas may experience a softening housing market according to their release: some regional U.S. markets are overvalued. California and Texas may experience a softening in their housing markets, though large downturns are unlikely.” The agency predicts home values will increase by 4.5% in 2016.