Real Estate Trends That Will Shape 2016.

5 Real Estate Trends That Will Shape 2016

Every new year dawns on a different housing market, and 2016 will bring some new developments of its own. We can expect home prices to stabilize – which makes both buying and selling easier – and the low interest rates that we saw in 2015 to continue. Mortgage rates, however, will rise, and the requirement of mortgage insurance may make government-issued loans more attractive than ever. Here are five real estate trends for 2016 that I predict will shape the housing market.

1. Record Low Interest Rates

As the U.S. is finally emerging from the recession of its housing market, interest rates have continued to decrease for most buyers. This doesn’t necessarily mean that loans will be easier to obtain, but it does make taking out a mortgage on a home more financially feasible for much of the country. Property owners may be able to realistically expect to sell much closer to their asking price as a result.

2. Stable Home Prices

The housing market is a constantly fluctuating system, but more stable home prices throughout the year will make pricing homes to buy or sell much easier. There will be a more reliable norm for prices in the St. Louis area, so paying too much or getting too little for a home will be less likely. We will also have a more stable national norm for home prices as well.

3. Increasing Mortgage Rates

Higher mortgage rates may seem like a bad thing for buyers, but the modest increase in mortgage rates that 2016 will see is a sign of a stabilizing housing market. Lower interest rates can help offset the higher mortgage rates, and the significantly higher demand for rentals will keep home prices from rising too much. This is a great year to invest in rental properties.

4. Required Mortgage Insurance

In an effort to prevent another crash in the market, mortgage insurance is now required. Some loans, including FHA loans, may have mortgage insurance built in, so these loans will likely be an attractive option for first-time homebuyers especially. With the added protection that mortgage insurance will provide as well as the stabilization of the market, buyers are likely to be bolder and sellers more motivated.

5. The Age of the Millennial

Last year may have seen more Millennials buying homes, but this year they will make up an even more significant portion of homebuyers. This will also affect new construction, as builders turn to smaller, cheaper, and more efficient designs to accommodate a new set of buyers. Late baby boomers who are entering retirement will make up a large chunk of the rest of the buyers, so this building trend will also appeal to retirees hoping to downsize.

This year will be a good one for buyers and sellers alike. While many homeowners will hold onto their properties, hoping for prices to rise, this may be the best time to sell for the boldest among us. When you count on the experience, knowledge, and dedication that I bring to every real estate transaction I facilitate, 2016 may be the best year your portfolio has seen since the economic recession.