Carson-Tahoe real estate trends that will shape in 2016
Special to the Sun-Bonanza
CARSON CITY, Nev. — According to Realtor.com, the nation’s official real estate-related consumer website sponsored by the National Association of Realtor, 2016 is shaping up to be the best year for the housing marketing since 2007!
Here is a brief list of trends expected to impact the housing market this year:
Great year to sell
In 2015, Millennials emerged as the dominant force in home buyers, representing almost 2 million sales, which is more than one-third of the total. This pattern is projected to continue in 2016.
Two other generations also will affect the market — financially recovering Gen Xers and older boomers thinking about or entering retirement. Since most of these people are already homeowners, they will play a double role, boosting the market as both sellers and buyers.
Higher mortgage rates
While mortgage rates rose a bit in 2015, they also came back down. A similar situation may take place in 2016, but the move by the Federal Reserve to guide interest rates higher should result in a more reliable upward trend in mortgage rates.
At this point, the level of increase is expected to be manageable. Markets with the highest prices will see that higher rates will result in fewer sales.
However, across the nation, it is expected that the effect will be minimal as the move to higher rates will spur more existing homeowners to sell and buy before rates go even higher.
Returning to normal?
This year we will see healthy growth in home sales and prices, but at a slower pace than in 2015. The good news is that this slowdown is not an indication of a problem, rather a return to normalcy.
We have lived through several years of volatile real estate market activity, and we are finally seeing signs of more normal conditions.
Builders will focus on affordable pricing
Single-family construction is lagging a bit on recovery. In 2015, builders shifted to producing more higher-priced housing units for a reliable pool of customers.
That focus caused new-home prices to rise much faster than existing-home prices. Builders were able to be profitable and grow by following this move-up and luxury strategy, but their growth potential was limited. This is expected to change in 2016.
Rents increasing more than home prices
If buying a home is an option for you, then this year is an opportune time especially considering that more than 85% of our nation’s markets have rents that exceed 30% of the income of renting households.
Furthermore, rents are accelerating at a more rapid pace than home prices, which are moderating — which means that it is currently more affordable to buy (than rent) in more than three-quarters of the United States.
If you have any questions regarding this information and/or homeownership issues in our area, please visit SNAR.org or call 775-885-7200.
Avis Cherry is President of the Sierra Nevada Association of Realtors and is a Realtor with Charles Kitchen Realty in Carson City. You may contact Avis at 775-741-3344 or ACherry@CarsonCityRealEstate.net.