The Lake Minnetonka housing market can expect a continuation of many of the factors it experienced in 2015. Zillow recently released their 2016 predictions for the housing and real estate markets. Let's take a look at what we can expect.
Lake Minnetonka Housing – Challenges Ahead
According to Zillow, many of the recent market trends will linger longer. Some will turn into challenges facing prospective home buyers.
Affordability will worsen.
While many Americans have known this for awhile now, home ownership simply might not be a reachable goal for some.
First time home buyers will be older.
In 1975, the median age of a first time home buyer was 29. Today, it's 33. This trend is expected to continue as millennials delay important life decisions such as getting married and starting families. In addition, many young people will continue to have a hard time moving from being renters to prospective home owners. The available inventory of starter homes remains low and many millennials have been unable or unwilling to save money for a down payment.
Home price growth will still outpace income.
While home values will grow at a slower rate than they did in 2015, they will still rise. Experts predict a return to increases of around 3.5%, which is the historical average. Home affordability is expected to get worse because income growth has remained stagnant — especially at the bottom end of the job spectrum. It is expected that the bottom third of working Americans will be priced out of home ownership.
Rents will continue to rise.
The rental market is a classic case of supply and demand. There is a high demand for affordable rental units and currently a limited supply. Zillow expects that trend to continue well into 2016.
Suburban areas will grow in popularity.
The affordability crisis will dramatically affect the urban centers. This means people will seek housing in the surrounding suburbs. There they will expect many of the amenities the cities offer – and close access to the urban centers – but with more affordable housing costs.
Get more updates on the Lake Minnetonka housing market and news that affects the market by checking back here from time to time, and by checking out the other articles in our Lake Minnetonka real estate news section of articles under Lake Minnetonka Real Estate Categories to your right.