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Big Expectations for Housing in 2016
Do signs point to another housing boom? Perhaps - home sales are poised to zoom to the highest levels since 2006 next year, according to a 2016 housing forecast issued by realtor.com®.
Gains in new-home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new-home construction market is expected to see the most gains in 2016, with realtor.com® forecasting a 12% year-over-year increase in housing starts and a 16% year-over-year growth in new home sales. The gains in existing-home sales are expected to be more moderate, with expectations of a 3% year-over-year gain.
"Next year's moderate gains in existing prices and sales, versus the accelerated growth we've seen in previous years, indicate that we are entering a normal, but healthy housing market," says Jonathan Smoke, realtor.com®'s chief economist. "The improvements we've seen over the last few years have enabled a recovery in the existing-home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market."
Total sales for existing and new homes are expected to reach 6 million for the first time since 2006 next year.
2016's Buying Force
Fueling the increase in total sales, realtor.com® predicts three distinct segments of home buyers to dominate: older millenials (25 to 34 years old); younger Generation Xers (35 to 44 years old), and retirees (65 to 74 years old), Smoke says.
Millennials:
Millennials are expected to make up the largest demographic of buyers in the coming year at 30% of the existing home market.
"Driven by increasing income, millennials will seek out homes that meet the needs of their growing families - putting the most weight on the safety of the neighborhood and the quality of the home," according to realtor.com®'s forecast. "Commute time and a preference for older homes have these buyers looking in city centers and closer-in suburbs."
Realtor.com® predicts some of the most sought-after markets for millenial buyers in 2016 - based on their large number of millennials, strong employment growth, and affordability - include:
1. Atlanta-Sandy Springs- Roswell, Ga.
2. Pittsburgh
3. Memphis, Tenn.-Miss.-Ark.
4. Boston-Cambridge-Newton, Mass.-N.H.
5. Austin-Round Rock, Texas
Young Generation Xers:
Buyers between the ages of 35 to 44 years old are likely to make up the second largest population of buyers in 2016.
"These buyers have rebounded from the financial crisis and are entering their prim family-raising and earning years," realtor.com®'s report notes. "More than two-thirds of the buyers in this age group already own a home. They will be moving out of a starter home into a larger home or more desirable neighborhood."
The markets expected to see the most upticks from these growing families are:
1. Atlanta-Sandy Springs- Roswell, Ga.
2. Denver-Aurora-Lakewood, Colo.
3. St. Louis, Mo.-Ill.
4. Charlotte-Concord-Gastonia, N.C.-S.C.
5. Columbus, Ohio
Retirees:
The third largest segment of home buyers in 2016 are expected to be individuals or couples who are looking to relocate or retire between the ages of 65 and 74. New retirees are expected to fuel a trend in downsizing and seeking out ways to lower their cost of living.
"They will likely put their home up for sale at the start of the home-buying season in March or April, and aim to make a home purchase following the sale of their home," realtor.com®'s report notes. "This age cohort has a very strong preference for newly constructed homes and put the most weight on their ability to customize their home."
The markets expected to see the most retiree buying activity in 2016 are:
1. Boston-Cambridge-Newton, Mass. - N.H.
2. Sacramento-Roseville-Arden- Arcade, Calif.
3. San Diego-Carlsbad, Calif.
4. North Port-Sarasota-Bradenton, Fla.
5. Cape Coral-Fort Myers, Fla.
Source: realtor.com®
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Final Walk-Through
You found the perfect house, made an offer, negotiated the price, had an inspection and ensured your mortgage. The only thing left is your final walk-through.
Walk-throughs are normally scheduled the day of, or day before the settlement, as the seller should be completely moved out. The object is to ensure that the house stands in the same condition as when you agreed to buy it.
This is not the time to nitpick about nail holes or carpet imperfections. Unless you’ve negotiated allowances for such issues, you’ll have to address them later after you’ve settled.
What could impact the transaction is property or fixtures that the seller agreed to leave behind are missing (e.g., a washing machine, pool table, garage cabinets, etc.) or if the seller leaves things that were supposed to be removed (e.g., paint cans, furniture, etc.).
With your agent at your side, be sure that obligatory repairs flagged during the home inspection are completed to code and satisfaction. If the seller agreed to replace an aging water heater but didn’t do it, this must be accounted for during settlement.
You may be eager to leave the house and get to the settlement, but don’t rush through the walk-through. Run the appliances through a full cycle to make sure they work. Turn on all faucets and showers as well.
Some contracts will specify that the buyer complete a walk-through a week or two prior to settlement followed by a quick meeting prior to settlement to check off any items previously noted. Again, any items or tasks that aren’t complete must be justified at the time of settlement.
Though issues may arise, the majority of walk-throughs go without a hitch as both parties are eager to complete the deal and willing to negotiate any final hurdles.
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