Since 2015 was good year for the real estate market, you can expect 2016 to be even better. The Northern Virginia area has weathered the ups and downs of the past few years without as many difficulties as most other regions in the county, which left us in a stronger position to take advantage of the return to a favorable real estate climate
1. Return to Normal
Expect a healthy growth in home sales and prices – at a slower pace than in 2015. “This slowdown is not an indication of a problem—it’s just a return to normalcy,” writes Jonathan Smoke, realtor.com®’s chief economist. In addition, new constructions will also be returning to more traditional levels, and prices rise at more normal rates consistent with a more balanced market
2. Generational Buying Trends Shape Up
Millennials or young adults’ presence on the housing market has been largely anticipated for years, but 2016 may finally be the year they make a move. They are expected to continue to be a major buying pool in 2016 with the majority of buyers between ages 25 and 34 who are expected to be first time home buyers.
3. New Home Construction Focuses on Affordability
One aspect of housing that has not recovered yet has been single-family construction.
Builders have been faced with higher land costs, limited labor, and concerns bout the demand of the entry level market. As such, they have shifted to constructing more higher-priced homes, which has caused new-home prices to rise significantly faster than existing-home prices. In 2016, they likely will shift to more affordable product to cater to the entry-level buyers
4. Higher Mortgage Rates
Mortgage rates went up in 2015 and also went back down. Expect a similar pattern in 2016.
The 30-year fixed-rate mortgage will likely end 2016 about 60 basis points higher than today’s level. Higher rates will drive monthly payments higher, and debt to income ratios will also go higher. Markets with the highest prices will see that higher rates will result in fewer sales. The effect will be minimal across the U.S as the move to higher rates will spur more existing homeowners to sell and buy before rates go even higher
5. Higher Rent
Already unaffordable rents will go up more than home prices. More than 85% of the nations's markets have rent costs that exceed 30% of the income of renting households. Because of this, it is more affordable to buy in the majority of the U.S.
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