What will happen with real estate this year? A few predictions are fairly common – rising mortgage interest rates, values, and prices. Read any business article on real estate, and you’ll see something like this.
There’s more to real estate than interest rates, values, and prices, though. Take a look at these three real estate issues to watch in 2016.
More Sellers Means More Inventory
Inventory has been shrinking for more than a year. In some price points, this has lowered sales dramatically as there are not enough available homes for sales for the buyers who want to own a new home. But there is good news. In a recent study by Fannie Mae, the Home Purchase Sentiment Index, 40 percent said now was a good time to sell a home.
For the second time in the study’s history, 85 percent of people said they weren’t worried about losing their jobs, while 15 percent said their income was significantly higher than the year before. This spells good news for potential buyers out there wondering where the inventory may be, and if they’ll find the home of their dreams.
First-Time Home Buyers May Remain Low
Historically, first-time home buyers make up nearly 40 percent of all home buyers in a given year. Since the recession, that number has dropped dramatically and hovers closer to 30 percent. This is important because new home buyers help drive real estate sales.
Millennials now surpass Baby Boomers as the largest demographic in the United States. Due to high student loan debt when they graduate college and rising rental costs, saving for a downpayment has become more and more difficult. Younger buyers want to buy homes but are waiting longer.
Rent-to-Own May Become More Popular
As rental costs rise and potential buyers must wait longer to save up the money they need, programs are popping up around the country to help renters become owners. Rent-to-own organizations, like Home Partners for America, Invitation Home, and American Homes 4 Rent, most common in larger metropolitan areas, buy the homes and rent them with the understanding that over time, the renter will buy the home from the organization.
While not common in places like the Emerald Coast, we may start seeing more and more of this become available for renters to help them buy their dream home. Each organization has their own criteria and not everyone will qualify. For those who do, they’re likely to live in nicer homes in better neighborhoods, making the ability to eventually own the home much more attractive.
For those who watch real estate trends and follow along with what’s happening in the industry, you know that no one thing makes or breaks real estate sales and home values or prices. These emerging issues may mak
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