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5 Real Estate Trends That Will Shape 2016

Posted by juliegamblesmith_tcrz4w on January 27, 2016
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As we come off one of the best years in the real estate market in 2015, we have experienced nothing but improved year over year health. There are many signs that 2016 should prove to be just as good as 2015, and perhaps even better. Here are a few indicators in which we should expect per Realtor.com.

A Shift in Generation Demand: In 2015 Millennials had been a significant portion of the sales for the year. In fact, Realtor.com tells us that they accounted for nearly 2 millions sales which is nearly one third of all transactions for the year. This number should only increase for 2016 as the large group gains more financial wealth due to the improving economy.

Meanwhile, both Gen Xers and Baby Boomers shall also play their role in the movement of the real estate industry. Gen Xers looking to trade up along with the empty nester Baby Boomers looking to downsize will make up the majority of the balance of activity that we see.

A Return to Normalcy: Think back to when supply and demand were somewhat in line with each other. Over the past 10-15 years we have experienced highs and lows like no other. As distressed properties are becoming slim and new construction is back catering to demand for housing, prices should show a more “normal” progression in their increases.

New Construction: As more building is happening we are seeing the much needed inventory to match demand. A strong economy with credit access only getting better will help first-time buyers more attractive to builders, especially in the Millennial segment. Strong growth should follow in single family construction and new home sales as builders should offer more affordable product in 2016 for this audience.  

Mortgage Rates: Rates were supposed to increase in 2015 in which they did, but then they also had their dips. A similar trend is expected for 2016 with the end result being forecasted at slightly higher percentage points than that of today. This is expected to raise the average monthly cost of a mortgage payment slightly which will of course affect what one can afford, however, this should not be enough where it is preventative for buyers to enter the market.

Rental Activity: More than 85% of the U.S. have rents that exceed 30% of the income of renting households. Because of this, it is more affordable to buy in more than three-quarters of the U.S. Until rents stabilize or more inventory is made available at lower rates, buying will be a more attractive option.

  • Julie Gamble Smith

    723 Hale Street, Beverly Farms MA 01915

    978.337.9644

    julie.smith@engelvoelkers.com

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