U.S. existing home sales made a strong comeback in December with prices also rising. The latest data follows weak economic reports including U.S. housing starts and building permits slipping in December. The Commerce Department said groundbreaking fell 2.5% last month, while building permits dropped 3.9% following strong November figures, which prompted some market watchers to call 2015 the best year in housing since the Great Recession. So what does 2016 have in store for the real estate market?
“A healthier housing market, with median home sale prices in 2016 projected to hit close to $250,000,” is what Nav Athwal predicts. The CEO of RealtyShares, an online real estate investment marketplace, also thinks the crowdfunding trend will grow this year. “Crowdfunding really caught on in 2015 as a great way to get access to the private real estate market and oftentimes earns yields that outpace other alternatives,” he said.
Athwal thinks the alternative financing is a way for “a growing number of investors ... to get access to the real estate market, given the volatility in the stock market, the low yields in bond markets.”
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Still, some markets, especially on the West Coast, such as in San Francisco and Los Angeles, may be facing a pullback in 2016. “They've already appreciated quite extravagantly, almost higher than where they were in pre-recession levels, so I think you'll see a slowdown in some of those markets,” said Athwal.
Wherever the location, being able to afford a home may continue to plague younger Americans in 2016. “The only real relief for them is [an] easing lending standard,” said Athwal. The real estate professional pointed to “a recent Fannie Mae survey [which] showed that lending would loosen in 2016 … That's the only saving grace really for millennials.”
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