And that means the people just ahead of the curve will be the ones with the massive advantage.
That’s why you need to know the trends that will be shaping real estate in 2016…
1. More unaffordable rent
More than 85% of markets in the US have costs of rent that are more than 30% of the income of renting households. That’s a problem. And it doesn’t appear to be turning around anytime soon.
Rents are continuing to accelerate at a more rapid price than housing prices – even asking rents on vacant units have been increasing by double digits in the second half of 2015!
That trend is almost certainly going to continue into and through 2016, so get ready for a market in which buying is more affordable than renting.
2. Increasing mortgage rates
With the Federal Reserve’s decision to finally raise interest rates, expect to see higher mortgage rates affecting high-cost markets the most. While the Fed can’t change mortgage rates directly, the trickle down affect will take care of that.
And keep in mind that the Fed is planning to continue rate hikes throughout 2016…
3. A return to yesteryear’s “normal”
For more than the past decade, we’ve been living through abnormal real estate conditions after the housing bubble and consequential bust, among other things. Now, we’re returning to more historically traditional levels.
A more balanced market has prices rising at more normal rates, new construction is returning to regular levels, and distress sales are becoming less of a factor.
4. Generational impact
What many people don’t realize is just how significant the roles of different generations have on real estate.
For baby boomers, those entering retirement will play a double role of both selling their existing property as well as buying new property in many cases.
Generation Xers are now entering their prime years alongside recovering financial conditions.
And Millennials will continue to emerge as the largest force in the real estate market as first-time buyers.