Top Three Real Estate Trends for 2016

[Raul Leyte]

The housing market continue to vastly improve in the past year and is expected to improve in 2016, many experts agree. However, in this new housing landscape, some trends are emerging that homebuyers, brokers and real estate investors need to keep both in mind.

MORTGAGE

Mortgage rates have been low at the beginning of 2016, stimulating a large number of applications for a loan, according to the Mortgage Banker's Association. The rates have been at historic lows for nearly a decade.

In December, that changed when the Federal Reserve began to raise interest rates gradually. Time Money said the first increase will not initially have a big impact on mortgage rates, in part because it was highly anticipated and many people in the industry were aware of the possibility.

The rate climb is required to be the first of four, each at twenty five basis points. This implies the likelihood that home loan rates will be influenced during the time is more prominent. Realtor.com clarified that, before the end of 2016, the 30-year fixed rate home loan is required to be 60 base points higher than it was toward the end of 2015.

MILLENNIALS

Generation X had many real estate professionals worried for a while, as very few of them were opting to give up renting in favor of homeownership. However, last year saw many people from this generation enter the housing market. According to Realtor.com, millennials accounted for approximately 2 million sales - more than one-third of total house purchases.

Time Money spelled out that, while millennials are usually not buying homes at the same age as their parents and grandparents, they still keep aspirations of having a home. However, many are not ready to take the step until later in life, as they usually are with other typical milestones, like marriage and starting a family. This means the population of millennial homebuyers will probably continue growing with the coming year and also beyond.

HOUSING INVENTORY

Time Money described another reason why a large number of millennials haven't entered the housing sector, which is that inventory is down right this moment, especially at price reduction points. Inventory is supposed to improve as we move further into the year, though.

Housing inventory grows in two ways: from houses that will be put up for sale, and from new construction. Both are likely to increase in the near future. As outlined by Realtor.com, baby boomers are attaining an age of downsizing, leading many to sell their homes and buy smaller ones. According to National Real Estate Investor, this trend will most significantly have an effect on the New York and San Francisco metro areas, as retired people search for lower priced housing

In the meantime, Realtor.com reported Generation X is by and large doing great fiscally as they enter their prime working years. This gives them the chance to redesign by selling their present homes and purchasing new ones. This will help stock levels in the lower value range, since a considerable lot of these families will move to better neighborhoods.

Homeowners will also look at selling their homes while rates are still low, in the hope of buying real estate with a good price on a new mortgage.

More homes will be built in 2016, as well. In recent years many builders have focused on the production of high end and expensive houses, to make up for low numbers of workers and the rising cost of real estate in the country. However, as the market continues to demand more low-cost housing options, builders will respond. Realtor.com says new housing prices started to drop by the end of 2015, and they expect the trend will continue this year.