From rock-bottom interest rates to skyrocketing home values, there’s no doubt that the last few years have seen some interesting trends in real estate-and there are certainly more to come.
The 2016 housing market will look different from 2015, but plenty of shifts will still happen that are worth keeping your eye on. Whether you’re a buyer, a seller, or an agent, look out for the changes outlined below to stay ahead of the market this year.
1. More Millennials Will Buy
Much has been said about Generation Y’s home buying habits (or lack thereof) in recent years, but they now make up the largest share of home buyers at 32 percent. And 80 percent of them see homeownership as part of their personal American Dream. So there’s reason to believe 18- to 34-year-old bracket will move into the housing marketing this year.
For a seller, that means marketing your property in ways that appeal to them will work best: real estate sites, mobile apps, virtual tours, and any other digital medium are options to consider. It’ll be worth the effort to attract the buying power of this generation.
2. Stagnating Prices
Now that the economy is humming along, we’ll start to see interest rates creep up as well, which will take a toll on the ability of buyers to obtain credit. It’s easy to see how this could cool off the unprecedented 6 percent gains in home prices we saw nationally in 2015. But that doesn’t mean there won’t be gains this year. Instead, expect them to be around 3 percent.
In short, we can expect the market to normalize some with steady gains after a period of sharp growth.
3. Urban Spaces Gaining Traction
If Millennials are serious about buying, they’re even more serious about buying homes in urban environments. They want walkable neighborhoods where driving isn’t a daily requirement and the always-on way of life that the city center provides.
With the rise of telecommuting, focus on career before family, and the increasing availability of attractive properties in downtown areas where many cities are revitalizing, it’s safe to say this trend isn’t changing anytime soon.
4. More Improvements, Less Inventory
One effect of those record-low interest rates that so many buyers have enjoyed is that they’re not ready to let go of them quite yet by selling their current home and buying a property that’s larger or more upscale. This will result in more homeowners opting to invest in improving the home they’re in currently instead of putting it on the market.
So we might see less inventory available, contributing to the gains in home prices mentioned earlier.
5. Higher Rents
Rents have been going up, and they show no sign of stopping because the demand for rentals in popular places to live continues to rise. Combine that with rising land prices and labor shortages for construction of new rental properties and you have a recipe for rental prices that are climbing well over 30 percent of income for many potential renters. In many cities that number rises to almost half of a renters income, further delaying them from saving for a down payment and entering the housing market.
Keeping these real estate trends in mind throughout 2016 will help you prepare for whatever real estate transaction you’re thinking of making this year. Apply them to your thinking to improve your buying or selling strategy, and you’ll be able to navigate the market in a more savvy way that’s sure to put you at an advantage.
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