Wednesday, December 30, 2015

Experts Revel 2016 Real Estate Predictions

As real estate-minded people, we’re always trying to predict the future. No one wants to buy at the height of the market, and everyone is scared the rates are going to rise. The more people you ask, and the more research you do, the more opinions you’ll hear. So, what are the real trends in the market, and what does that mean for us as buyers, sellers, investors, etc?
First, most experts will agree that extremely hot markets like NYC, San Francisco and Southern California will begin to cool down. These very expensive markets saw less of a hit in the recession and therefore rebounded much quicker. The sales will likely slow in these markets, which could possibly lead to increased inventory, or at least a slower rate of price increases.
Next, if people are starting to buy less in these hot markets, it would make sense that they are putting their money elsewhere. It seems as though more buyers are moving from the northeast and west coast and heading south. Markets in Texas, Florida and the Mid-Atlantic are all seeing more houses sell, and they are selling at a faster rate.
This third trend is a bit surprising, but a very good sign for overall population and density growth in our major metro areas. This is the trend of people living in more multi family/condo units, work-live spaces and amenity-rich suburbs. What was once the majority of home buyers frowned upon is now a very common trend in cities across the country. With such pull toward these hot markets, more and more people are moving into less and less space. Engineering and technology advances have led to innovative new building and neighborhood designs. The benefits of living in these kinds of areas are really starting to outweigh the possible negatives.
Now, let’s look at the age groups buying. Last year, only 25% of home buyers were classified as Generation X, or ages from 35-49. We should start to see more of this group entering the housing market. Millennials (those aged 34 and younger), made up about 32% of recent home purchases. They may be getting ready to trade up to a bigger house, as their starter condos/houses aren’t large enough for their new families. On the other hand, baby boomers will likely continue to downsize, selling big houses and moving into small housing developments and condos.
Four major trends that seem to summarize what most experts believe to be true. Interest rates will increase, but this small increase will only help stabilize the different markets, as seen in trends one and two, listed above. We are not in a bubble, people will continue to buy and prices will continue to increase slowly for the next few years. We are at a good time in real estate and should continue to see it improve. Just remember, you can make a good investment in any market trend - you make money on the purchase, not on the future predictions!

Thursday, December 17, 2015

Commercial Real Estate Market Activity Shows Signs Of Slowing In Q3, LLC, the nation's leading online real estate marketplace, today released its Q3 2015 Commercial Real Estate (CRE) Market Monitor™, which reveals that CRE market activity is continuing to show signs of slowing and stabilizing after several years of run-up and appreciation. Total transaction volume across the five major CRE sectors dipped 6.5 percent on a quarter-over-quarter basis, sitting just 2.6 percent higher than one year ago — down from 24 percent higher in Q2. The slowdown in deal volume occurred amid the patch of U.S. economic softness in late summer, though the overall capital markets climate remains bullish. Cap rates continued to tighten and prices across all sectors maintained their ascent.

"A drop in sales volume back in Q2 signaled an unexpected shift in the CRE market after a very strong first quarter, and now we're seeing actual proof of a slowdown," said Chief Economist Peter Muoio. "While all of the major sectors are still performing better than a year ago, CRE as a whole is feeling the pinch from recent shifts in the U.S. economy. Paced by a promising hotel sector, however, CRE pricing still remains on the uptick, even though that sector's price growth has decelerated over the past quarter and could cool in the immediate future."

Office and apartment transaction volume increased in Q3 as a share of the five sector total relative to the second quarter. While apartment deal volume climbed and pushed the sector's quarterly share 440 bps higher than its 10-year average, office volume was only slightly trailing its 10-year average. Retail and industrial shares of volume did not significantly deviate from historical trends, though the hotel sector saw a pronounced pullback in activity. That sector's share of total five sector deal volume shrank from at least 11 percent in each of the last two quarters to just 7.1 percent in Q3.

Sunday, December 13, 2015

Top 5 Real Estate Trends for 2016

The year is about to end but what do investors have to say about next year's real estate market? Nela Richardson, chief economist for Redfin, a national real estate brokerage firm, said that a rate increase won't be likely.

"Buyers now don't seem to be all that spurred or driven by a rate increase," Richardson said. "That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy," an article from US News reported.

"Buyers now don't seem to be all that spurred or driven by a rate increase," Richardson said. "That lack of urgency will translate into next year's housing market. There's interest, but there's not a lot of inventory to buy," an article from US News reported.
After that revelation, these top 5 real estate trends should be expected:
1.       Slowing coastal markets -- Ralph McLaughlin, housing economist at Trulla said that areas where the priciest homes are located (West Coast and Northeast areas) will see signs of slowing compared to the previous year. It is very noticeable in real estate markets in San Francisco, San Jose, Southern California and in the Northeast.

2.       Booming market areas in the South -- McLaughlin further speculated that areas like the metros of Winston-Sale and North Carolina will spark as buyers migrate to the south. Baby boomers and young investors will choose the south to escape the cold.

3.       Increase in suburban properties -- Svenja Gudell, chief economist from Zillow hinted that amenity-rich suburbs are more preferred than densely populated cities. Future homeowners are looking for better amenities such as easy access to commercial establishments, supermarkets, dry cleaners and other conveniences of suburban living.

4.       Increase in older first-time buyers -- people with growing families will now consider buying their own homes and those that are not too affected by the labor downturn may now think of buying next year. Millennials or those 34 and younger make up 32 perfect of the overall generational home buying trends from the National Association of Realtors.
5.       Increase in trade ups from millennials -- those that already own homes, condos or apartments may be thinking of trading up for a more spacious home to start their own families. But inventories may be reduced in most markets since other types of homeowners are looking for trade ups as well.