5 Key Trends for 2016

When New Year comes, new hope also unfolds. 2015 has been a great year for the real estate industry; this is why experts are also looking forward to 2016. Will this year be as good as or better than 2015 for the housing market? Here are the 5 key trends for 2016:

1. Things will go back to normal

If you think that 2015 is the year of normalcy, then 2016 is better. Normal means that there will be healthy increase or growth in sales and prices. Why should we be looking forward for things to go back to normal? This only means that the housing market for 2016 will be healthier and more stable. This will also effect into a consistent rates and a balanced market.

2. Millennial buyers will make 2016 the best year to sell in the near future

Millennials played a bigger role in the home buying market in 2015. This will also be a continuing trend for 2016. Financially, buyers between the ages of 25 to 34 will be ready to make that purchase and most of them are first time homebuyers.

Other generations that will play a bigger role in 2016 will be the Gen Xers who are also recovering financially as well as pensioners or retirees who will be looking to downsize their property. This means that most of the old boomers will be selling their properties which will also balance out the housing inventory for 2016.

3. Single-family construction

Builders have ceased with single-family construction since the market has not been doing well for the past years. They saw that it would be profitable to focus on building higher priced housing units instead of providing for entry level market. However, builders have now started to regain its focus on building single-family construction which is more affordable. This is also perhaps lenders are now becoming more lenient especially when it comes to mortgage loan approval. However, this is still dependent on the availability and location.

4. Higher mortgage rates will affect high-cost markets

30 year fixed rates will most likely end this year about 60 basis points higher compared today. Higher rates will also drive monthly payments higher as well as debt-to-income ratios will go higher. Markets with the highest prices will see that higher rates will result in decrease of sales but across the nation, there will be a minimal effect as the move to higher rates will spur more existing homeowners to sell and buy before rates go even higher.

5. Rents will continue to go up in 2016

Due to the housing crisis, it has caused rental housing to exceed 30% of the income of renting households. This will be bad news for consumers who are not looking to buy anytime soon due to poor credit scores, limited savings and lack of stable income to qualify for a mortgage.

By now, you might have been thinking about buying a home due to the stability of the housing market improving your financial condition. Make sure that you get in touch with a real estate professional to ensure that guide you through your home buying process.

Source: http://www.realtor.com/news/trends/five-key-trends-for-2016/