Real Estate Trends that Will Affect the Housing Market in 2016
It has been nearly a decade since the real estate bubble burst, and we are finally beginning to return to a state of more balanced normalcy. Economists are predicting that the economy will continue to see strong growth in 2016. This year’s housing market is likely going to be strong as well. Here are four trends that will significantly impact the 2016 housing market.
More Affordable Single-Family Homes
An area of the housing market that is clearly still recovering is the construction of affordable single-family homes. In past years, builders have focused on luxury and higher-end homes as a way to minimize their financial risk. This is beginning to shift, however. As folks are increasingly able to get access to credit, the single-family home building market will continue to improve.
Millennials and Baby Boomers
As the economy continues to improve, more and more millennials (folks between the ages 25-34) will be looking to buy a home. In fact, this age group represented the largest home-buyer segment in 2015, with over 2 million home sales. At the same time, baby boomers (folks between the ages 51 and 70) are beginning to retire and may be looking to down-size to smaller homes. What does this mean for the 2016 housing market? These generational dynamics will likely create an ideal market for sellers.
Higher Interest Rates
In December 2015 the Federal Reserve increased short-term interest rates for the first time since the financial crisis. Most experts are expecting long-term rates – which have an impact on the cost of homes – to also rise in the next few years. This means that the cost of credit will increase for potential home-buyers, resulting in higher mortgage payments. It’s still a good time to buy a home though, since interest rates are still quite low.
Skyrocketing Rental Rates
Even with the improving economy and expected increase in mortgage rates, 2016 is a very good year to buy a home – especially as housing rental rates continue to climb. Rental rates currently exceed 30% of folks’ income in over 85% of the housing markets across our nation (www.realtor.com). Additionally, rental rates are increasing at a faster pace than the price of homes.
If you’re thinking of selling your home or buying a new one in 2016, you may be looking at home improvements, upgrades, or even additions. Maximize your return on investment with fairly simple projects such as replacing your front door or garage door with an elegant wooden model. Building a deck or adding wood siding can also increase the value of your home. Bigger projects may include expanding living space by converting an attic to a bedroom or adding on a full new addition.
Heartwood Mills wood product specialists are here to help you select the right materials for your projects. If you’re a builder capitalizing on the resurgence in the housing market, give us a call about becoming a supplier.
