Marketwatch, as part of its New Year’s coverage, recently provided a well-researched and reported forecast of the four real estate trends that will shape the market in 2016. It’s really a good read and well worth the visit. The piece features no shortage of pertinent takeaways that can be applied to the Chicago real estate market.
To begin, Marketwatch predicts home prices are likely to stagnate in 2016 after several years of big growth. In 2015, home prices increased 6% nationally from the previous year. That rate will likely come in at 3% in 2016.
The reason for the slowdown in price appreciation is the increasing problem of affordability, industry observers note. As home prices have skyrocketed in recent years, more people are simply being priced out of buying a home. On top of that, to stave off inflation in a strengthening overall economy, the Fed is expected to give a notable bump to interest rates. Experts believe the 30-year mortgage interest rate could go from its current 3.83% all the way up to 4.65%. That would further put a dent in home affordability, observers warned.
The other major prediction made by Marketwatch is that more Millennials will look to buy homes beginning in 2016. A survey revealed 80% of millennial aged buyers (18 to 34) wanted to own a home in 2015, which is noteworthy because that number was just 65% in 2011. Experts predict it will be an incremental increase of Millennial buyers over the next three years.
Marketwatch dives into even more predictions for the 2016 real estate market. This includes an expected decrease in the number of available homes nationwide, and the rollout of more new mortgage loan products that will allow consumers to more easily extract equity.
You can read the full Marketwatch story here.