Real Estate Market Trends For Summer 2016
Real Estate Market Trends for Summer 2016
Another spring is over, another summer just begun. As we head into the warmest months of the year, the real estate market typically tends to cool a bit, following the hottest buying season of the year. But with everything that’s happened in the housing market over the last few years, 2016 may be anything by typical. So let’s take a look at what may be in store for this summer.
Lack of Available Homes to Purchase Likely to Remain an Issue
As the rental market has continued to heat up over the last few years, a general lack of inventory has slowed sales in many markets nationwide. This has been a primary driver of prices post-crisis, but with prices likely to “normalize” or at least slow their steady climb over the course of the summer, lack of inventory may be less of an issue than it has been recently.
Trouble With Financing for Younger Buyers Likely to Remain an Issue
Millennials, the second largest generation in the history of the United States and the largest living generation, are still having a difficult time making it into the market. Despite their expressed desire to own their own homes, many younger buyers are having trouble getting the funds together to meet the current down payment requirements for financing a home.
This is primarily due to a combination of massive student loan debt, rising rents, and stagnant wages. The federal government may ease some financing restrictions put in place following the recession, but announcements have not been forthcoming.
Rising Rents, Lack of Rental Inventory, and Stabilizing Home Prices
The rental market will most likely continue to heat up through the summer, making rental inventory an even greater issue as home prices continue to stabilize, following a period of significant growth. This will likely provide incentive for a great many buyers who may not otherwise have entered the market this summer.
However, mortgage rates are also expected to continue to climb. This will drive up debt-to-income ratios, especially in areas with the highest home prices, keeping some out of the market for credit issues mentioned above while driving others into the market looking to capitalize on lower rates than they will be able to get for what may be a very long time.
The Bigger Picture
So, what does it all mean? Despite, the challenges to many hoping to enter the market as buyers this year, rising rental rates coupled with moderate growth in home prices and rising mortgage rates should drive a busier than typical summer buying season. However, lack of available homes in some areas will present an issue to many buyers.
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