What to Expect from Real Estate in 2016

Ben Stoodley  |

As real estate-minded people, we’re always trying to predict the future. No one wants to buy at the height of the market, and everyone is scared the rates are going to rise. The more people you ask, and the more research you do, the more opinions you’ll hear. So, what are the real trends in the market, and what does that mean for us as buyers, sellers, investors, etc?

First, most experts will agree that extremely hot markets like NYC, San Francisco and Southern California will begin to cool down. These very expensive markets saw less of a hit in the recession and therefore rebounded much quicker. The sales will likely slow in these markets, which could possibly lead to increased inventory, or at least a slower rate of price increases.

Next, if people are starting to buy less in these hot markets, it would make sense that they are putting their money elsewhere. It seems as though more buyers are moving from the northeast and west coast and heading south. Markets in Texas, Florida and the Mid-Atlantic are all seeing more houses sell, and they are selling at a faster rate.

This third trend is a bit surprising, but a very good sign for overall population and density growth in our major metro areas. This is the trend of people living in more multi family/condo units, work-live spaces and amenity-rich suburbs. What was once the majority of home buyers frowned upon is now a very common trend in cities across the country. With such pull toward these hot markets, more and more people are moving into less and less space. Engineering and technology advances have led to innovative new building and neighborhood designs. The benefits of living in these kinds of areas are really starting to outweigh the possible negatives.

Now, let’s look at the age groups buying. Last year, only 25% of home buyers were classified as Generation X, or ages from 35-49. We should start to see more of this group entering the housing market. Millennials (those aged 34 and younger), made up about 32% of recent home purchases. They may be getting ready to trade up to a bigger house, as their starter condos/houses aren’t large enough for their new families. On the other hand, baby boomers will likely continue to downsize, selling big houses and moving into small housing developments and condos.

Four major trends that seem to summarize what most experts believe to be true. Interest rates will increase, but this small increase will only help stabilize the different markets, as seen in trends one and two, listed above. We are not in a bubble, people will continue to buy and prices will continue to increase slowly for the next few years. We are at a good time in real estate and should continue to see it improve. Just remember, you can make a good investment in any market trend - you make money on the purchase, not on the future predictions!

Ben Stoodley, Hard Money Lender & Realtor

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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