Housing market in 2016 depends on affordability
Posted on Monday, December 7, 2015 at 2:20:15 PM
Following a year of solid recovery, the housing market in 2016 will depend almost exclusively on home affordability. According to Zillow, a shortage of affordable homes close to city centers will continue to push young and first-time homebuyers out into the suburbs.
"In 2016, we'll start to see more people in hot coastal markets forced to move farther from the core of the city to find housing," said Svenja Gudell, Zillow's chief economist. "When they get there, they'll be looking for amenity-rich suburbs - mini-cities, with walkable cores and an urban feel."
Next year, the median age of first-time buyers is going to set a record. They are already an average of 33 years old - three years older than they were in the late 1980s - after renting for about 6 years before buying. Thirty years ago, the average rental period was 4.4 years, according to Zillow.
Along those lines, rental prices are expected to skyrocket in 2016, reaching the highest median rents ever recorded. This will likely spur increased residential lending, as young buyers seek to duck out of expensive apartments in favor of homes that will be more affordable in the long run.