Since 2015 brought about a speedy change in the real estate market after years of instability, will this year be a good year for realtors, investors and agents? The real estate industry is looking forward for the year to unfold for many reasons, several experts have predicted positive trends.
Ever since the housing crash in 2006/2007, the real estate market has been witness to a lot of highs and lows both in sales and in house prices. This year, prices have been predicted to increase but the good news is, so will the sales. Because the prices will be higher, the pace of the sales will be slower but in a more balanced market with more stable rates. As Chief Economist Jonathan Smoke says in his post for Realtor.com, “…I’m pretty sure that we’ll see that it was a great year of growth and improvement—one that sets the stage for a return to normalcy in the months and years ahead.”
Young Adults Will Be More Willing to Buy Homes
Young American adults at the ages of 25 to 34 will be more likely to buy a home. Rents in other states will increase which will make buying a home a more practical choice. With many of the generation’s working force awaiting promotions, it’s highly likely that they will become first-time home buyers. “Experts say that first-time home purchases by Americans under the age of 35 will gain momentum as economic prospects continue to improve” according to Lauren Coles of ibtimes.com.
This is not to say that other generations will not play a role in the market this 2016. Older generations who are already retired and own a home will play a role as both buyer and seller.
Fewer Homes in the Market
As Zillow analyses housing affordability, the data shows that the increase in the value of houses will rise slower, but its pace is expected to be quicker than the rise in income. Because prices have been predicted to rise, it also means that down payments for houses will also rise.
If you’re an average American who’s looking to move to a bigger and better house, you might have to save up a bigger amount of money for down payment. It’s more likely that you will consider remodeling the home you already own instead of selling it.
Another reason why fewer homes will be available in the market is that most mortgage payers still owe more than what their home is worth as seen in another report by Zillow.
Best Year to Sell
We already mentioned that fewer homes will be available in the market this year. If you’re considering putting your house up for sale, this might be the best year to do it. Per Realtor.com’s prediction of home sales reaching 6 million for the first time since 2006, 2016 will be the standout year to take advantage of scarcity in listings.
Low Down-Payment Mortgage Products
Individuals who have good credit have been observed to leverage into purchases like new cars or boats. Only a few go for mortgage loans because of the increase in interest rates. With this said the need for products that require a smaller down payment and lesser premiums for mortgage insurance will significantly increase. Products that spread the cost of home ownership to multi-generational families will be made more available.
Circumstances are looking up for the real estate market in 2016. The market rates will normalize, rents are predicted to rise up, buying a home will be the more practical choice, 2016 might be the best year to sell and new mortgage products will be made more available for the average American.