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5 Real Estate Trends That Will Dominate 2016

by Melissa Dierks

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 22, 2015
This year may have marked the best for housing since 2007, but the market will likely get even rosier in 2016, according to a recent real estate forecast by realtor.com®. One of the main drivers behind the brighter 2016 is the projection that employment will continue to grow, which will add to consumers’ wallets and allow them to purchase their first home or upgrade to a new one.

Realtor.com® highlights the following housing predictions for 2016:

1. ‘Normal’ is coming.

Expect a healthy growth in home sales and prices – at a slower pace than in 2015. “This slowdown is not an indication of a problem—it’s just a return to normalcy,” writes Jonathan Smoke, realtor.com®’s chief economist. “We’ve lived through 15 years of truly abnormal trends, and after working off the devastating effects of the housing bust, we’re finally seeing signs of more normal conditions.” New construction and distressed sales are expected to return to more historical levels, and home prices are expected to follow at “more normal rates consistent with a more balanced market.”

Read more: Alas, Inventory Shortages Likely to Stay in 2016
2. Generational buying trends shape up.

Young adults’ presence on the housing market has been largely predicted for years, but 2016 may finally be the year they make a move in a larger way. Millennials represented nearly 2 billion sales in 2015 – one-third of home buyers. They are expected to continue to be a major buying pool in 2016 with the majority of buyers between ages 25 and 34 expected to be first-time home buyers next year. But two other generations will also have a big presence in 2016: financially recovering GenXers and older baby boomers who are entering retirement, realtor.com® notes. “Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers,” Smoke notes. “Gen Xers are in their prime earning years and thus able to relocate to better neighborhoods for their families. Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living.”

3. New-home construction focuses more on affordability.

Builders have been faced with higher land costs, limited labor, and concerns about the demand of the entry-level market. As such, they have shifted to constructing more higher-priced homes, which has caused new-home prices to rise significantly faster than existing-home prices. In 2016, they likely will shift to more affordable product to cater to the entry-level buyers. “We are already seeing a decline in new-home prices for new contracts signed this fall,” notes Smoke. “In addition, credit access is improving enough to make the first-time buyer segment more attractive to builders.”

4. Higher mortgage rates.

Mortgage rates will likely be volatile in 2016. But the recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher in the new year than the historical lows they have been at for years. The 30-year fixed-rate mortgage will likely end 2016 about 60 basis points higher than today’s level. “That level of increase is manageable, as consumers will have multiple tactics to mitigate some of that increase,” Smoke says. “However, higher rates will drive monthly payments higher, and, along with that, debt-to-income ratios will also go higher.” The markets with the highest home prices will see the effects from the higher rates the most.

5. Rents to go up even higher.

Rental costs are skyrocketing, and the costs are likely to only go up in the new year. More than 85 percent of the nation’s markets have rents that exceed 30 percent of the income of renting households. “Rents are accelerating at a more rapid pace than home prices, which are moderating,” Smoke says. “Because of this, it is more affordable to buy in more than three-quarters of the U.S. However, for the majority of renting households, buying is not a near-term option due to poor household credit scores, limited savings, and lack of documentable stable income of the kind necessary to qualify for a mortgage today.”

Source: “The 5 Real Estate Trends That Will Shape 2016,” realtor.com® (Dec. 16, 2015)

How Much House Can Millennials Afford?

by Melissa Dierks

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 22, 2015
For millennials looking to own, they may want to head to the Midwest or South. They tend to fare better in the heartland than the coasts for housing, according to a new study.

Read more: Most and Least Affordable Cities for Millennials
SmartAsset determined the average home price that would be affordable to millennials in the 23 largest cities in the country by gathering data on the median income and median net worth for Americans under the age of 35.  

In cities like Houston, San Antonio, and Indianapolis, the typical young buyer may be able to purchase a 1,000 square foot or larger home. In Detroit and Memphis, Tenn., they may be able to buy a home that is 2,500 feet or larger. On the other hand, in New York, Los Angeles, San Francisco, and Washington, D.C., the typical millennial may only be able to afford a home that is less than 300 square feet.

Take a look at this chart below from SmartAsset to see how much house millennials can afford in some of the largest cities in the country.



 

Source: “How Much House Can Millennials Afford?” SmartAsset (Dec. 16, 2015)

The 20 Hottest Home Features Right Now

by Melissa Dierks

DAILY REAL ESTATE NEWS | MONDAY, DECEMBER 21, 2015
Must-have home features are constantly evolving. After all, just a half century ago, shag carpeting in all hues – gold, orange, and purple – were all “in.” But what’s hot with home owners and buyers now?

Home staging and design tips: Visit Styled, Staged & Sold
Realtor.com® set out to find out, evaluating what must-have home features are hot right now by analyzing millions of listings at its site for the most commonly used phrases of home features.

The following 20 features were most often used in listings on realtor.com® in 2015:

Fireplace (gas fireplaces were the leading type of fireplace mentioned)
Wood floor
Carpet
Granite counter
Stainless steel appliances
Open floor plan
Walk-in closet
Formal dining room
Vaulted ceiling
Open kitchen
Tile floor
Covered patio
Finished basement
Breakfast bar
French doors
Chef’s kitchen
Crown molding
Central air
Separate shower
Garden tub
View more information about each of these “hottest” home features at realtor.com®.

Source: “Garden Tubs Are In, Spa Tubs Are Out: The Hot List of Home Features,” realtor.com® (Dec. 21, 2015)

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Melissa Dierks
The Regal Team of RE/MAX Professionals
7111 W Bell Road, Suite 101,
Glendale AZ 85308
Direct: (623)229-0154
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