The American Dream of owning real estate is still very much alive, though not quite as well as it once was. A recent poll by the National Association of Realtors found that approximately 70% of U.S. adults still want to own their own home. But many people — especially Millennials — believe they’ll never be able to afford it, or that market conditions will never be favorable enough to justify the risk. However, there is some good news. Predicted real estate trends suggest there may be solid reasons to enter the market in 2016.
Positive Real Estate Trends for 2016
- House prices are stabilizing — The rapid upswing in real estate cost is slowing significantly for the first time in several years. This means 2016 will likely be a buyer’s market, and buyers will be able to drive better bargains.
- 2016 will be a good year for first-time home buyers — More jobs and a better economy means first-time buyers (mostly Millennials) will have more money to spend on housing. Millennials made up one-third of all home sales in 2015, and that’s expected to continue through 2016. Baby Boomers entering retirement will also sell off their properties to downsize their cost of living.
- Builders will construct more affordable homes — Home builders have concentrated more on affluent customers the last several years. That should start to change in 2016 as the market stabilizes and the economy keeps growing. This also means there will be more new houses in circulation.
4 Solid Reasons to Enter the Real Estate Market in 2016
- Interest rates are currently at record lows — The interest rate for 30 year fixed mortgages fell below 4% last summer, and are still hovering around that mark. Of course, this could change anytime in 2016, but you can still get a killer deal on mortgages for the time being.
- Down payment costs are lower — The challenges of scraping together enough for a down payment has kept many people renting. But, there are more programs now to help home buyers. Some, like this one from Freddie Mac, can reduce down payments to 3%.
- Renting will get even more expensive — According to Rent.com’s 2015 Rental Market Report, almost 90% of property managers raised their rents last year. An 8% rent hike overall is expected for 2016, and the number of available rental properties is nearing its lowest point in 20 years.
- Homeowners continue to receive favorable tax breaks — The biggest break is the ability to deduct all your mortgage interest from your taxes. This only applies to home loans under $1 million.
There’s no doubt that the ongoing recession of the American economy has locked out a lot of potential home owners. But, the predicted trends in 2016 may offer enough solid reasons to entice buyers to grab their slice of the American Dream and enter the real estate market this year.