Welcome back to another edition of Coffee with Connie. Today I am excited to share a recent article I came across on Realtor.com with you. This article talks about the 5 trends that are going to shape the housing market in 2016. We are going to go through each of these trends today!
1. A return to normalcy: The market is going to increase at a very healthy rate. The last 15 years, the housing market has been anything but normal. We’ve gone from having a really bad market, to a really good one, and everything in between. Last year was the best year for home appreciation since the market crash in 2007, but this year we will see things taper off a little bit. We are going to start to see a more normal, healthy appreciation rate and the market is finally going to return to normal.
2. The generational shift: This is going to impact both buyers and sellers greatly. Millennials are starting to enter the market at record numbers, and most of them are first-time buyers. A lot of them will be buying homes from homeowners in generation X, who are looking to upsize. Meanwhile, baby boomers are downsizing to smaller homes.
3. More affordable new construction: Up to this point, builders have had to face high land costs, a limited labor market, and not enough demand in the entry-level market for new homes. They have been making money selling luxury homes, but the demand for those has gone down. Builders are going to be limited in how many homes they can continue to sell unless they get into those lower price points. We are going to see a lot more affordable, newly-built homes come on the market in 2016.
4. Higher mortgage rates: These higher rates are mainly going to affect buyers in the higher price points. They have gone up a bit, but are still historically low. What that means is if you’re thinking about buying, every 1% increase in rates is going to make a home 10% more expensive. We think a lot of buyers will try to beat those rate hikes by buying now.
5. Rental rates will continue to go up: We saw a double digit percentage increase in rental rates last year, and that trend is going to continue. A lot of people who want to buy can’t, which will keep rental demand and prices up. What we really need is more construction options for renters to keep up with the demand.
If you have any questions for us about this topic, or want to know more specifically about the Cobb County market, give us a call or send us an email. We look forward to hearing from you!