2016’s Top Trends for Housing
According to Realtor.com, 2015 was the best year for housing since 2007. And the website’s chief economist Jonathan Smoke says 2016 should be even better. These are the top trends he thinks will have the greatest impact on the housing market this year.
1. A return to normal. Home sales and prices will continue to grow, but at a slower pace – indicative of a more balanced market.
2. Generational shifts improve home sales. As Millennials’ personal financial conditions improve, they’ll continue to make a big mark on the market, many as first-time buyers. At the same time, financially recovering Gen Xers entering their prime earning years will be relocating to better neighborhoods, while older Baby Boomers will be entering retirement and downsizing. “Assuming that most of these households will both sell and buy, it is important to recognize that 2016 is shaping up to be the best year in recent memory to sell,” says Smoke.
3. Builders will focus on more affordable homes. To stay profitable, builders had concentrated on higher-priced housing units, avoiding the first-time buyer segment. But now, credit access is improving enough to make entry-level buyers more attractive to builders, who will increase construction of affordable homes.
4. Upward trend in mortgage rates. This year should see a slow and steady rise in interest rates. “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase,” Smoke says. “Markets with the highest prices will see that higher rates will result in fewer sales; however, across the U.S., the effect will be minimal as the move to higher rates will spur more existing homeowners to sell and buy before rates go even higher.”
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Rachel Sheller, Principal Broker, Realtor, CRS, ABR, GRI, SRES
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