Forecasts and predictions for the next 12 months have finally started coming out of the woodwork. So what are the industry analysts expecting to happen to the real estate sector in 2016? What are the chances of them being right? Perhaps even more importantly, what does it all mean for your real estate investing business?
The Realtor’s Forecast for 2016
Realtor.com says it’s time to break out the glasses and celebrate. Building on 2015, which was reportedly the best year for real estate in eight years, the National Association of Realtors’ consumer portal predicts 2016 will be even better than last year. Much of this hope rests on big generational housing shifts. Millennials are getting in, Generation X is getting back in, and Boomers are downsizing to retire. If this activity kicks in, it will probably be earlier in the year before mortgage rates go even higher. While rates are still historically low, they are expected to be up by as much as two percent when 2017 comes around. Realtor.com predicts that builders will begin focusing more on low cost housing. That’s a good thing, considering rents keep going up, and more than 85% of markets are seeing renters fork out over 30% of their income for housing. Anticipate more building, less distress sales, and a better balanced market for buyers and sellers.
Inman News Predictions for 2016
Brad Inman recently unleashed his own set of expectations for 2016. The site forecasts a number of mergers, including that of major real estate brokerages, and MLS services. An array of other predictions call for more technology and automation of the real estate purchase and sales process. This includes Uber teaming up with a real estate firm for showings, and Zillow beginning to market offline.
Bisnow Weighs in on the Future of Commercial Real Estate & Development
Bisnow’s predictions for 2016 have highlighted a rise in commercial real estate vacancies. This is partially due to recent construction, and significant office and residential rental inventory in some popular markets such as Baltimore and Miami. BisNow also highlights that although there are thousands of new units coming online in 2016, developers are also getting creative, and using food markets and other trends to spike community interest to support their building.
Zillow on What to Expect in 2016
Zillow may be one of the most bearish when it comes to the housing outlook for 2016. Zillow’s forecast for housing prices in 2016 is for median prices to reach $187,493 by October. That’s up just a modest 2.6%. This is based on many markets seeing home prices slip slightly in the coming months, while some like SW Florida will experience over-sized gains. Zillow is also very ‘realistic’ about the impact of mortgage interest rates on the U.S. housing market. In particular, the online real estate company points to the challenge of higher rates cutting homebuyers out of the market due to debt-to-income ratios. Of course, given the notorious Zestimate, anything coming from Zillow should be taken as a very broad generalization.
Summary
It’s likely to be a very busy year for real estate. Agents, in particular, are going to be in for a fight. They are going to have to battle new technologies, mergers creating big giants to compete against, and disappointed clients dealing with the impact of higher mortgage rates. There will be more inventory to choose from, and there is massive transaction activity potential. How much of it will be realized will depend on how much higher interest rates go, and how well consumers react to that.
