A few points that my team and I would like to share about our views on the 2016 Real Estate market; in Basking Ridge and beyond (I have italicized the points that I believe are most pertinent in our area:
Normal is Coming
- Expect healthy growth in home sales and prices – at a slower pace than in 2015.
- New construction and distressed sales should return to more historic levels, and home prices are expected to follow at “more normal rates consistent with a more balanced market.”
- “We’ve lived through 15 years of truly abnormal trends, and after working off the devastating effects of the housing bust, we’re finally seeing signs of more normal conditions.” – Jonathon Smoke, chief economist at realtor.com®.
Generational buyer trends shape up
- They are expected to continue to be a major buying pool in 2016, with the majority of buyers between ages 25 and 34 expected to be first-time home buyers next year.
- Two other generations will also have a big presence in 2016: financially recovering GenXers and older baby boomers who are entering retirement. Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers.
New home construction focuses more on affordability
- Builders have been faced with higher land costs, limited labor and concerns about 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 products to cater to the entry-level buyers.
Higher Mortgage Rates
- Mortgage rates will likely be volatile in 2016. But the recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher in the new year from the historic lows they have been at for years.
- However, higher rates will drive monthly payments higher. Along with that, debt-to-income ratios will also go higher. This means the markets with the highest home prices will see the effects from the higher rates the most.
Rents go up even higher
- Rental costs are skyrocketing, and the costs are likely to only go up in the new year. More than 85 percent of the nation’s markets have rents that exceed 30 percent of the income of renting households.
- Rents are accelerating at a more rapid pace than home prices, which are moderating. Because of this, it is more affordable to buy than to rent in more than three-quarters of the United States.
Are you ready to start looking or to get the value of your home in today’s market? I’m ready to help!
Call, email or text me at 908-432-0301, jennifer@jenniferblanchard.com.
Or click here to get started on your own by searching listings, requesting the value of your home, or reviewing past sales.
Visit www.basking-ridge-real-estate.com – for all of your local real estate needs!
