Real Estate Trends for Spring, 2016

News of the rebounding housing market is everywhere; and Boston has been named one of the top real estate markets to watch in 2016 according to Realtor.com. This news is making Boston one of the top targets for foreign investors, according to the Association of Foreign Investments in Real Estate. Nationwide this “normalization” of the real estate market is going to create new trends for 2016 that are more unique than in previous years’ markets. While overall -- seeing the market stabilize is a good thing -- it may be a double-edged sword in certain areas. Here’s what to expect locally in real estate for 2016.

Listing shortage

Housing prices have continued to increase at a strong rate, which is perfect for current home owners who can sit back and collect the growing equity, but not so much for first-time buyers. The growth of housing prices obviously limits the number of sellers willing to part with their assets to those who are desperate to either relocate or down/up-grade. As a result, there’s still a shortage of inventory in these greater Boston markets. While this makes it difficult for buyers, sellers will have the ability to hold out for their listing price due to more competitive offers. The drought of new listings is a result of the baby boomer generation not being as quick to downsize as previous generations have been; leaving fewer homes on the market, less options on both sides of the transactions, and leading to more bidding wars.

An influx of young buyers

We’ve all heard of the increasing power of the millennial generation; but now more than ever these 18-34 year olds will be making their mark on the real estate market. While student loan debt may keep some millennials out of the market for now; a study shows that in 2016, 80% of this age range wants to own their own home, which is up from only 65% in 2011. While growing income adds to this spike, other factors like the increasingly unaffordable rental rates have made owning a home much more in reach.

Market Rebounding

The housing market downturn is finally beginning to heal and borrowers with restored credit have a desire to own a home again. The National Association of Realtors says close to 1 million formerly distressed homeowners are looking to buy again; and additional 1.5 million are expected to participate in the housing market over the next five years.

All of these factors, combined with the growing number of jobs (approximately 5 million jobs gained between 2014 and 2015) is making the real estate market as solid as it’s been for a long time. A lending officer at a large financial institution said, “You can never forget about cycles, but the next 24 months looks doggone good for real estate.” That’s news we’ve been waiting to hear for a long time.