My Annual 10 Real Estate Predictions For The New Year

1. Interest rates will rise again this year and inch up somewhere north of 5% by the year end. What happens when interest rates increase? While entry-level buyers will bear the most impact, since it limits what they can afford, this will actually help the market. It will increase home-buying action, spurring lookers to become buyers. There is always a surge of activity when rates begin to rise.

2. The U.S. housing market had a strong year in 2015, and I predict 2016 will bring more of the same. But we probably won’t see as many double-digit home price gains in 2016, like we did in some areas last year. Supply and demand imbalances drove prices up, while job gains brought more buyers into the market.

3. Homebuilding will continue to ramp up in 2016, but more in line with “moderate” pricing vs. high-end prices. For the North Shore region that means homes in the $700k+/- range vs. million dollar plus homes. This shift will provide builders with a larger buyer pool to draw from and faster absorption of product.

4. Job gains will continue to bring more home buyers into the market.

5. Residential apartment rental costs will rise.

6. Millennials, aged 25-34 years, will make up the largest demographic of home buyers in 2016. Driven by increasing income, millennials will seek out homes that meet the needs of their growing families – putting the most weight on the safety of the neighborhood and the quality of the home. Commute time and a preference for older homes have these buyers actively looking in city-centers and closer-in suburbs.

7. Buyers between the ages of 35-44 will be back in the market again likely making up the second largest population of buyers in 2016. These buyers have rebounded from the financial crisis and are entering their prime family-raising and earning years. More than two-thirds of the buyers in this age group already own a home. They will be moving out of a starter home into a larger home or more desirable neighborhood.

8. Individuals or couples looking to relocate or retire are expected to make up the third largest home buying segment in 2016. Ages 65-74, they will be selling their current home in an effort to downsize and lower their cost of living. They will likely put their home up for sale at the start of the home-buying season in March or April, and aim to make a home purchase following the sale of their home. This age group has a very strong preference for new construction and puts the most weight on an ability to customize their home.

9. On the commercial side, expect multifamily and industrial properties, two strong sectors in 2015, to remain so again in 2016. Rental apartment construction will surpass condominium construction in some areas as rents continue to rise (see #3 above).

10. Overall, improving economic factors will provide more people the needed income to buy. Job growth creates housing growth.

2016 will be a very good year. Call us if you are ready to buy or sell a home.

Thank you!

Provided by:

Jay Burnham & Linda Morey, Premier Associate Team

Coldwell Banker Residential & Commercial Brokerage

NorthShoreRealEstate.com