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Eye on real estate

What to expect this spring

Created date

March 23rd, 2016

Real estate publications have been reporting the top five real estate trends to expect this year since early December 2015, but now that the spring market is shifting into high gear, what do those trends mean to people selling now?

For older generations who are looking to shed the responsibilities of home maintenance by moving to Lantern Hill, in New Providence, N.J., the top five trends may have different outcomes than for those who are buying a single-family home in the area. Let’s take a look.

1. Back to “normal.” According to realtor.com, the market will balance out with a steady but not outrageous growth in home sales and prices. “This slowdown is not an indication of a problem—it’s just a return to normalcy,” writes real estate reporter Jonathan Smoke.

“We predict housing prices to continue to climb with modest gains between 3%-5% this year,” says Lantern Hill Personal Moving Consultant and local real estate agent Jenn Kohan. “For those thinking of moving to Lantern Hill, they will certainly see the benefits of the increase in property values.” 

What’s more, Kohan says, the job market has rebounded in New Jersey with plenty of growth. “That means more buyers are feeling confident and will be looking for houses to buy this year,” she says.

The combination of those two factors is a home run for people looking to sell and move to Lantern Hill. “The more buyers looking for homes, the better for sellers,” says Kohan.

2. Millennials moving in. Millennials—buyers between ages 25 and 34—represented one-third of total sales in 2015, and that trend will increase in 2016, making this the best year to sell in the near future, says realtor.com. 

What’s more, older Baby Boomers looking to right-size are providing much of the inventory millennials desire. 

“Many millennials are first-time buyers, or they are trading up from condos or starter homes. This creates the perfect role for older generations downsizing and transitioning to maintenance-free living at Lantern Hill,” says Kohan. “It’s a win-win situation for both generations. Our incoming residents are providing homes that millennials are looking for to start their own families. ”

3. Rising mortgage rates will spike sales. The move by the Federal Reserve to guide mortgage rates upward will spark a temporary spike in real estate activity. However, this year’s predicted rate hike is expected to be minimal.

What’s more, job growth combined with continued low inventory of homes for sale creates pent-up demand. 

“This combination will benefit those selling this spring and moving to Lantern Hill because there are already buyers waiting for properties to purchase,” says Kohan. 

4. Buying more favorable than renting. With rents rising higher and higher, in many parts of the country, buying is more affordable than renting. Renting households that can qualify for a mortgage are more likely to enter the market as serious buyers this year. 

“Mortgage rates are still at historic lows, making buying the smarter choice,” says Kohan. “Especially as millennials go from renting to buying, marrying to having families, the trend is to settle where families will grow—into walkable neighborhoods with good schools,” says Kohan.

5. Gen Xers ready to buy. Trends No. 3 and No. 4 will also cause older buyers to enter the market or trade up.

“Gen X (ages 35 to 49) is more established in their work, seeing higher income than millennials. The affordability factor for today’s property values has less of an impact in that their income has hopefully kept up with rising property values—something millennials and first-time home buyers have been struggling with,” says Kohan.

Kohan brings up another good point: Gen Xers may be looking to trade up their homes. They can use the value of their current house to springboard into a larger one. “These make great buyers for Lantern Hill prospective residents selling their large homes,” Kohan says.

A study of generational homebuying trends by the National Association of Realtors in 2015 reported that Gen Xers made up just over a quarter of recent buyers, while millennials made up 32%. Those trends are expected to continue this year, providing a bounty of buyers for those wishing to sell.

Overall, strong job growth and consumer confidence are expected to fuel this year’s real estate market. 

Though rising property values and mortgage rate hikes may cause affordability struggles for some, those factors may also benefit those moving to Lantern Hill.

“We expect to see millennials being pushed from cities to inner suburbs such as those surrounding Lantern Hill,” Kohan says. “For sellers, the pent-up demand for real estate will provide a strong seller’s market this spring.”

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