We had a great 2015—the greatest year for housing since 2007. And we foresee an even better time in 2016. Thousands of buyers will return to the market in 2016.
How? Well, with economic growth, there will be an increase in employment rate, meaning that people will have more money coming in, and they will be able to purchase their first home or move to a new and better one.
Here’s a close look at the real estate trends that will have the highest impact on the housing market in 2016.
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Increased mortgage rates will have the highest effect on high-cost markets
Mortgage rates were predicted to rise in 2015, and they did—even though they also went back down. We anticipate the same fluctuation in 2016; however the move by the Federal Reserve to guide high-interest rates higher should lead to a more reliable upward pattern in mortgage rates.
Thirty-year fixed rates are likely to end 2016 just about 60 basis points greater than they are today. That degree of increase is manageable, as clients will have multiple strategies to mitigate some of that boost. Nevertheless, higher rates will drive monthly payments higher, and, in addition to that, debt-to-income ratios would also go considerably higher. Markets with the largest prices will see that increased rates will lead to fewer sales; nevertheless, across the U .S., the impact will be minimal as the move to much higher rates will encourage more current property owners to sell and buy before prices go even higher.
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Booming bargain belt.
As the Northeast and West Coast cools in sales, we expect the “bargain belt” (metro areas in the South) to boom in the coming year. Metros like Winston-Salem, [North Carolina], have seen the biggest boom year-over-year.
2016 also sees buyers migrating south. A lot of baby boomers and even young people are thinking of moving south to be out of the cold. According to reports, the median sale price for Winston-Salem was $130,150 as of October 31. On the flip side, the average sale price for New York City was more than four times as much ($599,900) for that same period of time.
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Demand for amenity-rich suburbs.
As most buyers get priced out of the city centers, they consider suburban housing in a different light than in the past. People’s preferences have begun to change. They’re searching for amenity-rich suburbs and choosing this type of housing over the cul-de-sac on the outskirts. These amenities might include quick access to grocery stores, dry cleaners and other conveniences close to the home.
Walkability factor is a significant trend. A lot choose to live in areas that are close to highways, trains, and stores where they can have a lot of their conveniences. Young families usually want suburbs that still has an urban feel.
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Millennials trading up.
According to estimates by the National Association of Realtors (NAR), Millennials represent the largest segment of buyers for the second consecutive year. Today, one out of three buyers is a millennial, so it makes sense that their entry into the housing market gives a significant boost to the sector.
At the same time, it is obvious that the millennials are more cautious about making large investments, as is the case of acquiring a home- because they lived the crisis very intensely a decade ago.
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The boomerang buyers
But millennials are not the only assets in real estate for this 2016.
An estimated seven million Americans lost their homes to foreclosure during the last crisis. But according to the NAR, 950,000 of those owners who lost their homes, are able to buy again after recovering and showing a credit that makes them eligible for a mortgage without risks.
Estimates go further: over the next five years will be incorporated active housing market nearly 1.5 million homeowners manner. The boomerang effect could be a not inconsiderable boost to the real estate sector.
Everything indicates that the wounds of the most recent recession have begun to heal. On one hand distressed home sales down and increased real estate prices in several regions of the US.
