2015 was the best year for housing since 2007. According to reports by realtor.com, 2016 will be even better. The reason? Employment is projected to grow, adding money to consumer’s wallets, which will allow them to purchase their first house or upgrade to a new one.
Here are the top 5 reasons real estate will grow again in 2016:
- Back to Normal – Although growth in 2016 might be slower than it was in 2015, the growth will be more consistent with normal growth. The past 15 years have been truly turbulent times in real estate and we are finally seeing signs of typical growth conditions.
- Trends Taking Shape – The forecast of a large number of young adults buying houses has been projected for years. In 2015 nearly 2 billion sales (one-third of home buyers) were classified as Millennials. This trend is expected to continue this year as 25 – 34 year olds will be buying their first home in 2016. Another buying group, Gen Xers and Baby Boomers, are recovering financially and are preparing to enter the housing market again as they look to relocate or downsize.
- More Affordable New Homes – Being faced with higher land costs, labor shortages and increased demand for entry-level, new home builders are shifting gears and focusing on more affordable, entry-levels home rather than higher-end construction as seen in years past.
- Mortgage Rates – Rates in 2016 will be volatile. For years, rates have been at historic lows. A recent move to increase rates by the Federal Reserve shouldn’t scare of potential buyers. Rates are still low and consumers have ways to mitigate some of the increase.
- Higher Payments for Rent – Rent continues to skyrocket in 2015 and is likely to continue throughout the year. In fact, it is more affordable to buy than it is to rent in three-quarters of the Unites States.
Taking these factors into account, the housing market is primed for continued growth in 2016. Taking into consideration higher rent, low interest payments, more affordable new construction – new home construction in 2016 will be a primary focus for a large portion of home buyers this year.
This article was adapted from realtormag.com