5 Real Estate Trends That Will Effect 2016
According to Realtor.com, 2016 is on track to be a great year in real estate. With economic growth moving, employment will continue to increase, meaning that people will have more money coming in and they’ll be able to buy their first home or upgrade to a new one.
Here’s a closer look at the trends that will have the greatest impact on the housing market in 2016.
1. The market will return to "normal". This is not a bad thing, it's actually a stabilization of home prices that had been booming and dropping for the past 15 years. We will no longer have a market filled with distress sales, and prices will rise at a more normal and reasonable pace.
2. Generation changes will make 2016 a good year to sell. Millennials are becoming a dominant force in the real estate market, representing almost 2 million sales in 2015. Gen. X and the Baby Boomers are either upgrading or downsizing. Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers. Gen Xers are in their prime earning years and thus able to relocate to better neighborhoods for their families. Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living.
3. Home builders will focus on more affordable homes. The cost of land, labor and construction costs kept the new home prices high. With credit opening up and many first time home buyers, the home builders will offer more affordable homes.
4. Higher mortgage rates. Realtor.com expects higher rates in 2016, higher rates will drive monthly payments higher, and, along with that, debt-to-income ratios will also go higher.
5. Rents will continue to rise. Rents are accelerating at a more rapid pace than home prices, which are moderating. Because of this, it is more affordable to buy in more than three-quarters of the U.S.
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