- Growing rental rates and moderate home price growth should mean more people look to buy in 2016.
- Mortgage rates will rise, which should also boost numbers of buyers.
These are the two most important housing market trends in 2016. The pattern seen in 2015 was largely characterized by a white-hot rental market, and if this continues, more households will likely choose to rent over buy.
Demand for for-sale properties will grow and continue to largely consist of older millennials (ages 25-34). This demographic has potential to claim a third of the properties sold in 2016. Generation X could also be big factor in home sales this year, as this demographic is in prime earning years and experiencing better economic circumstances, which include more relocations and finding better neighborhoods for their families.
Supply will also improve as a result additional growth in construction, particularly in single-family homes.The growth will be in more affordable price points, which will help bring down average home prices and average size of new homes.
Mortgage rates should begin their long-anticipated ascent as the Federal Reserve attempts to influence rates up without negatively affecting economic growth.
The final key trend is that rents will rise more rapidly than prices, adding to the already burdensome level of rents that exist in more than 85% of the markets in the country. In the near term, this reinforces the consumer’s decision to buy.