December 2nd, 2015
Renting in 2016–The Forecast
2016 is almost here and it might not be the year for new and first time home buyers due to affordability. Rising prices will force young renters to wait longer before buying a home.
Zillow’s predicts that millennials will put off owning a home this year, especially for low-income Americans. If millennials do choose to buy, they will move farther out to suburban areas.
Zillow Chief Economist Dr. Svenja Gudell said, “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. 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 transition into homeowners, low home ownership rate should stop falling as fast as it has been. However, the median age of first-time home buyers is the highest it has ever been– at about 33, which will increase. Millennials want to buy, but they are waiting longer than previous generations.
According to Gudell, “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.”