The Fed raised interest rates in December 2015 for the first time since 2006. Millennials are becoming a bigger force in the housing market. And, cities like Denver, Seattle, Dallas and Portland are seeing huge increase in housing demand. What can the industry expect in 2016?
Zillow economist Svenja Gudell told Money.com that in 2016, "We have fairly low inventory in the cities. In 2016, we'll see first-time homebuyers looking at suburbs - not just any suburbs, but those that are more dense, more walkable. We're also going to see an uptick in the number of condos being sold, especially for first time homebuyers."
Gudell also noted that markets haven't yet reacted to the fede raising rates, and probably won't in the year ahead. According to Forbes contributor Bill Conerly, higher mortgage rates may eventually take their toll, but "we're 18-24 months away from that," and we can expect housing construction to increase and home prices to rise.
On millennials not jumping into the housing market, Gudell said, "One issue is that inventory is very low, especially on the bottom end of the price distribution. There are very few of those available, especially in these markets that have the most jobs."
Econimists at TheStreet.com predict that "boomerang buyers" are going to make a return. These are consumers who include the estimated 7 million Americans who went through foreclosure in the years following The Great Recession. Since then, many have been able to recover and now present a more reasonable credit risk. The National Association of Realtors (NAR) says that almost a million formerly distressed homeowners may be looking to buy again.
Agree/disagree? What's it like in your city? Let us know in the comments!
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