What’s Up for Real Estate in 2016?

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Millennials Are Looking to Buy

Buying selling, or renting, the Fed’s anticipated rise in interest rates is expected to impact all sorts of real estate trends. What’s that going to mean for your business?

  • Stagnant home prices.
    As interest rates go up alongside minor wage increases, the rising cost of credit could result in a surge of unaffordable markets and possible stagnation in home price appreciation as monthly mortgage costs put added strain on the pocketbooks of buyers. The toll? Housing price increases of 3% in 2016 versus the 6% national rise seen this year. How high will rates climb? A predicted 4.65% on 30 year rates, up 0.77% from the current rate, according to Realtor.com.
  • Millennial interest will continue to increase.
    Not a huge upsurge – merely incremental, as in recent years. Muddying the waters: Rising home prices and rents alongside the mixed millennial bag of saving for a nest egg at mom and dad’s whilst paying down student loan debt, working jobs with stagnant wages and waiting out boomers for promotions.
  • Fewer houses for buyers.
    The housing market’s recovery has been a double-edged sword for those looking to step-up, leaving entry-level houses hard to come by. If interest rates rise, the effect will worsen: People won’t want to trade-in a lower mortgage rate for a higher one, and may opt to re-invest equity into their existing homes. Compounding the issue: 15% – 7.9 million borrowers – whose home values are still underwater.
  • New mortgage loan products.
    Though mortgage originations are still expected to rise, a real need for new loan products is emerging – loans that don’t require large down payments or years of mortgage insurance premiums, and others that would allow for the extraction of equity from homes.

As real estate trends shift, you need to know. Trust in Properties Online to keep you on the leading edge of the industry. Learn more.

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