2016 Real Estate Trends: Booming Bargain Belt, Millenials Trading Up, and More
In the yearend of last year, the U.S. Federal Reserve was predicted to raise interest rates for this year which propelled prospective homebuyers to take action, however, 2015 proved that prediction wrong. This time, that pattern may no longer come to be.
"Buyers now don't seem to be all that spurred or driven by a rate increase," says Nela Richardson, chief economist of Redfin. "That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy."
With 2015 nearing its end, here are some of the real estate trends that are expected to come with the New Year, U.S. News reports:
Cooling coastal markets
For the past several years, the market was in a boom for metropolitan areas on the West Coast and Northeast, but McLaughlin is predicting a decline in the country's priciest housing markets. "Particularly in places like San Francisco, San Jose, Southern California and also some places in the Northeast, we're finding that homes in those markets ... [are] starting to slow down slightly from the previous year," he says.
Booming bargain belt
While the Northeast and the West Coast gets cold, McLaughlin is seeing the "market belt" or the South's metropolitan areas to flourish this coming 2016. "In metros like Winston-Salem, [North Carolina], we've seen the biggest year-over-year increase in how quickly homes move off the market," he adds.
This forecast is supported by Silversons CEO Michelle Silverman Beddell. "A lot of people are thinking about selling in the Northeast," she says. "A lot of baby boomers, and even young people, are thinking of moving south to be out of the cold." What fuels this could-be trend is the huge difference in price for the different areas.
Demand for amenity-rich suburbs
More people are also looking at suburban housing for a different reason than the past. "People's preferences have started to change," says Svenja Gudell, Zillow's chief economist. "They're searching for amenity-rich suburbs [and] choosing this type of housing over the cul-de-sac in the suburbs." Among these amenities are grocery stores, dry cleaners, and other conveniences close to homes.
"Walkability factor is a big trend," Bedell adds. "A lot of [buyers] choose to live in areas that are close to stores, trains and highways where they can have a lot of their conveniences." Young families in particular prefer suburbs that offer an urban feel.
Older first-time buyers
According to Richardson, Gen Xers, particularly those with growing families are likely to be propelled into real estate this coming year. "They've had some steady income, and they haven't been too affected by the earlier downturn in the labor market," she says. "They may have missed out on buying at the bottom, but they could be ready to buy next year."
Millenials trading up
By 2016, millenials staying in condos or starter homes may trade up for a bigger space. However, most markets have low inventory as homeowners are choosing to renovate instead of selling their homes. "People are trying to trade up," Bedell says, "but there's not much on the market currently."