Popular home search portal Zillow Group has just published its list of predictions for the real estate market in 2016, and much of the focus is on deteriorating home affordability, which will kick start a new trend among new buyers to look to the suburbs.
That's not actually as bad as it sounds for city dwellers, because more and more suburbs these days look like walkable, amenity-rich mini-cities. On the other hand, there is more bad news for renters, where rising rents will force people in this bracket to wait longer to purchase a home. Meanwhile, the threat of rising mortgage interest rates should eat away at the excellent mortgage affordability we've seen over the last few years.
Zillow's Top 5 Predictions for Housing in 2016
1. The median age of first-time buyers will reach new highs in 2016 as millennials put off homeownership and other major life decisions.
2. Growth in home values will outpace incomes, especially for low-income Americans. In 2016, those whose incomes fall in the bottom third of all incomes will be priced out of homeownership and unable to afford even the least expensive homes on the market.
3. Rising rents won't let up in 2016, and will continue to set new records. The next year will bring the least affordable median rents ever.
4. As affordable housing close to city centers grows increasingly scarce, people will move farther out. Dense, walkable suburbs with an urban feel – especially those that offer good access to the city – will be 2016's new hot spots.
5.The median expectation of more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey1 was for home values to grow about 3.5 percent in 2016.
"Rents will continue to increase at a brisk rate in 2016, but many potential first-time buyers are living in hot markets where buying a home is really expensive,” said Zillow Chief Economist Dr. Svenja Gudell. “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. When they get there, they'll be looking for amenity-rich suburbs – mini-cities, with walkable cores and an urban feel.”
"As renters gradually transition into homeowners, the historically low homeownership rate should stop falling quite as quickly as it has been. However, the median age of first-time homebuyers – already the highest it has ever been at about 33 – will climb higher. Millennials want to buy, but they are waiting longer than previous generations,” Gudell continued.
"All of this will happen against a backdrop of slowly increasing interest rates. That will make some homeowners think twice about selling, and many of them will decide to remodel their current homes instead."
Premier Agent App launched
In other news from Zillow, the company has just launched a new "Premier Agent App", a new mobile application for real estate agents who leverage Zillow and Trulia. The app is now live in the iOS and Android app stores.
The Premier Agent App is designed to make agents more efficient by giving them a fast, streamlined way to manage their incoming contacts from Zillow and Trulia, while providing expanded insights on the home shopper or seller who contacts them. It is available for free to all agents who have a Zillow Group profile.
"The kind of robust information we're providing agents has never been so easily accessible before," said Greg Schwartz, Zillow Group chief business officer. "Through the app, agents are able to quickly and easily learn about their potential clients, enabling them to provide a more tailored customer service experience. We are dedicated to helping reduce friction for real estate agents who use the Internet as a principal business channel and this app is an important pillar in that mission."