No one person can truly predict the future of the housing market for 2016, however, as we’re two months in, we’ve seen an abundance of reports on what’s to expect for the year. So, what is aligned in these reports and what are my thoughts?
There’s a common thread in most of these reports, secondary cities are growing. The popular central hubs, especially for commercial real estate, such as New York and Los Angeles aren’t as appealing as they once were. For one, more and more millennials are seeing the value in suburban living. Not everyone is keen on living in the city without the greenery and space. Thus, places such as Portland, Austin, and Nashville are seeing a an influx in traffic into their cities.
The appeal of these cities is frankly a no-brainer. For one, they get an abundance of space, compared to that of New York City or San Francisco. The cost of living also improves dramatically for those moving away from these central hubs. Moreover, we’re seeing more tech companies are choosing to build their business in a more cost-effective area, thus the more jobs available for millennials. In most cases, these up and coming cities are a short distance from these central hubs, yet a fraction of the cost.
Another trend we’re seeing is the development of more affordable housing options. 2015 was a difficult year as far as rates of homeownership, ending at 63.5 percent. What we’re seeing now is more companies are choosing to develop more rental properties, to cater to the overwhelming demand. There’s been experiments involving micro housing, which is defined as 350 square feet or smaller. According to an article from curbed.com, highlighting a study from Urban Land Institute, young professionals are attracted to the opportunity of saving 20-30 percent on rent.
Of the articles published, these two ideas seem to be the general consensus for most, and it makes sense. We’re in a time where millennials simply can’t afford to live in the central hubs of America and are desperately looking for alternative options. Check back here for more real estate trends in 2016!