2016 Real Estate Trends

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Real estate trends for 2016

Real estate trends for 2016 are looking great, which may come at a surprise to some of you considering how well the market did in 2015. Can the momentum really keep going? The short answer, according to various reports, such as Emerging Trends of Real Estate: Yes.

The last couple years were the best the housing market has seen since 2007. While 2016 is off to a slower start than 2015’s market, investors and buyers should not worry about another decline any time soon. The market does vary from location to location, year to year, but with a decreased unemployment rate, things seem to be looking up in many areas. If you are looking to buy your first home (or a new home), you will want to consider the local job market first. Furthermore, this slowed pace is just an indication of the market returning to normal conditions after years of suffering from the housing bubble.

Before we look at this year’s real estate trends, let’s look at some of the contributing factors of this growth in recent years:

  • First, millennials have different spending priorities than previous generations, and they will have a major impact on the economy, according to this report by Goldman Sachs.  As Gen Y becomes more financially savvy, they are choosing investments they can make money on. Luckily for the housing market, homes are one of those investments. Despite it taking longer for millennials to start families and purchase homes than Gen X and Baby Boomers, they are contributing to this rise in the market and actually make up a large portion of first-time buyers.
  • Locations like Austin, Seattle, Denver, San Diego and Portland are among Emerging Trends 2016’s list of top 20 markets for real estate and development. The report also attributes this to the fact that many of these locations doing well in the market are also on the Kauffman Foundation Study top 10 list for entrepreneurship. Because of this, they are seeing many young business owners relocate to these areas for more opportunities.
  • Baby Boomers are reaching or are currently in retirement age and looking to downsize. This means more real estate opportunities in both selling and buying.

While many other factors contribute to the recent rise in the housing market, such as technology and globalization, here are some key trends happening in 2016 for real estate:

  1. A great year to sell. We’ve already mentioned the impact Generation Y has had on the market, but as millennials are reaching their prime spending years looking to purchase their first home, Generation X and Baby Boomers are looking to decrease their cost of living, after already spending years as homeowners. This means their contribution is a double function on real estate. While your local market does still determine the supply and demand of homes, this seems to be a trend across the board that will impact suburban areas, especially from those looking to start a family.
  2. The spotlight is taken by 18-hour cities. Areas defined as 18-hour cities, such as Portland and Austin, are perfect for millennials looking to advance in their career. These second-tier cities are developing rapidly and typically have a lower cost of living, hence their attraction to the younger crowds. They also provide lower costs for doing business along with similar job opportunities as the big scale cities, such as New York City and San Francisco. The 18-hour cities are perfect for investors right now, and 2016 will see more real estate investment options. It’s a great time to jump on this bandwagon.
  3. More office space comes in demand. With the rise of entrepreneurship and job growth in recent years, office space is also becoming more in demand. This means less vacant rental space for realtors and an increase in rents. An open floor plan is the latest trend for offices in addition to co-working spaces, thus resulting in a change in layout and design. These factors have all been helpful in strengthening commercial properties.
  4. Mortgage rates will slowly increase. Although there is a decrease in distressed sales property, mortgage rates are expected to slowly increase. The increase will mostly seem to be manageable as homeowners will begin to get creative with alleviating the amount such as utilizing opportunities through Airbnb. It will need to be taken into consideration, though, as this could mean borrowing more money with higher interest rates. Areas with the highest mortgage rates will see fewer (or slower) sales in real estate; however, the good news is that the pressure for affordable housing is on the rise. This brings me to the next trend:
  5. New homes to be more affordable. In previous years, new-home prices have been rising much more than existing-home prices, which makes it difficult for lower- to mid-level income folk to purchase a new home. Despite the profitability of building luxury-style homes, it limits potential financial growth and entry-level sales.  This year should see a shift from this strategy as home-builders begin to create a more affordable product.
  6. Unaffordable rents posing a problem. The cost of rent is excessively high in most of the United States, which is pushing people more toward home-buying options. This may seem like a positive trend toward real estate, it is in fact a concern. Due to low credit scores, limited savings and the like, purchasing a home for renting households is not an easy solution. The housing market does depend upon multiple key factors, and affordability and the economy are among them. If individuals are spending half of their income on rent, it can predictably hurt the overall well-being of the housing market.

Whether buying or selling, you always want to pay attention to your local market to determine what is best for you. Overall, as an investor or consumer, these key real estate trends should help to guide you along and keep you in the loop of what is happening and what is to come. In addition, it’s important to stay updated on the housing market regardless if you are currently involved in real estate. Consider these, along with location, before making your next big move.

What to Look for When Buying Your First Home

First-time home buying is exciting but also stressful.

First-time home buying is exciting but also stressful.

Buying your first home is an exciting new chapter in your life, whether you are tackling it as a bachelor (or bachelorette) or with your soon-to-be wife (or husband).

It can be fun daydreaming about designing your new home, but one of the biggest mistakes you can make is putting the cart before the horse. First-time home buyers have the tendency to house hunt first and prepare later. Avoid this mistake, which can cost you time and money, by following these guidelines before buying your first house:

  • Check your credit report and score. Don’t even bother reviewing all those online listings until you know whether or not your credit can handle buying a home. Even if your credit can handle it, you want to have a strong enough financial background that you will be able to get a lower interest rate on your loan. It is recommended to review this at least six months before the shopping process so that you can spend some time improving it.
  • Know what you need, and prioritize. There is a difference between needs and wants, and when going into a large purchase like this, you may have to make some sacrifices of what you want for what you need. Factors such as the neighborhood, school district and location should all make your checklist. Basing your home buying decision on looks and layout alone may leave you feeling regretful.
  • Know what you can afford. Getting your finances in order and knowing what you can afford each month for your new house will be imperative to avoiding future issues. Often, there are hidden costs that are forgotten once those papers are signed such as taxes, insurance, maintenance and so on. It is safer to over-estimate your monthly payments to ensure you are fully financially prepared. Another good home-buying practice is getting an idea of what your down payment will be. This venture is all about being as prepared as possible for all costs.
  • Get pre-approved. Once you know your credit score, it’s time to see how much you are able to borrow. Sellers want to know this number, and it’s important for you to realize your spending range as well. Getting pre-qualified for a loan will help to save you time and energy as you begin the process.
  • Find the best real estate agent for you. Buying your first home is no joke, so you should spend some time finding the right real estate agent for your needs, budgets and goals. Talk to co-workers, friends and families for referrals to try to find that person you feel like you can already trust. Take some time to shop around for a real estate agent as you shop around for your home. You may want to even look into hiring a realtor to take your search one step further and ensure that credibility.
  • Consider educational seminars or consulting. The best way to make sure you are making a wise home-buying decision is to know your stuff. Research, know what you are signing off to and keep yourself educated on the process. You may want to look into one-day seminars offered by real estate companies or even consulting with a mortgage lender to really grasp what to expect.
  • Get a home inspection. Last but certainly not least, get that home inspected. You definitely do not want to make such a large purchase without knowing what is beneath those walls. Issues within the home can be fixed prior to you taking over, which will be a huge relief off your shoulders. Just be aware of all the additional expenses in maintenance that would become your responsibility upon ownership.

Don’t be afraid to ask for help as you begin the home buying process. The more you understand, the better the chances are that you will set yourself up for financial success with your new home.

 

Financial Tips for Live-in Couples

Financial Tips for Couples

Financial Tips for Couples


Just because you don’t have a marriage license together doesn’t mean you do not need financial tips as a couple.

When you make the exciting (yet scary) decision to move in with your partner, it needs to be about more than just sharing a home; it needs to be about sharing your financial goals as well.

Deciding to co-exist with your significant other in one space is a big step in the relationship, which is why money needs to be a topic of discussion before knowing where the couch is going to be located in the living room.

Financial tips for couples can be missed among all the other advice being provided by friends and family on how to keep the love alive in a long-term relationship or what to expect when cohabitating. But, here are some simple things to consider as you begin to move forward together:

Be transparent about your finances. 

Don’t wait until after a marriage proposal or, worse, after the wedding to discuss your finances with one another. If you want to build a long-lasting healthy relationship, you should talk about your debts, financial goals, savings, assets and the like so that you can start things off on the same page. You may want to go as far as sharing your credit score. This is often needed prior to renting a home or apartment anyway.

Take care of your own debts. 

Unless discussed for special circumstances or confirmed future goals, you should strive to always cover your own debts. Having your partner cover the costs of your financial obligations can cause some serious issues. Have you ever heard that money is one of the biggest causes of break-ups? That statement exists for a reason. Discuss your monetary goals with one another but also create your own together. This can help to determine when it would be necessary to help cover debts in the relationship that aren’t yours.

Know how the household expenses will be split. 

Being aware of one another’s income and debts will also be helpful in knowing whether a certain space is right for you as a couple. If there is concern there may be resentment if one is paying more than the other, choose another space that won’t put a strain on anyone’s bank account. If actually purchasing a home together, be sure to put both of your names on everything so that responsibility does not fall all on one or the other in the relationship just in case a break-up were to occur.

Because my boyfriend and I are only leasing an apartment, we found what would be easiest for us would be for him to pay the rent and I would cover the household bills. Over the last three years of living together, we have worked hard at really building a team setting.. If we need groceries and he is out and about, he will pick them up. We do, though, tend to go together so that we can split this cost 50/50. Our house is not just somewhere we sleep at night; it’s our home that we’ve built together, even if it is a lease.

Overall, it is all about maintaining that open communication and applying financial tips that make sense for you and your relationship.

Are you taking that big step with your partner? What challenges have you faced or overcome financially together?