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5 Real Estate Trends That Will Shape 2016 Print

Realtor.com predicts that housing will have an even better year in 2016 than we did in 2015. Here's a look at the trends that will have the greatest impact on the housing market in 2016.

1. We'll return to normal. The year ahead will see healthy growth in home sales and prices, but at a slower pace than 2015. This slowdown is not an indication of a problem, just a return to normalcy. 

2. Generational shuffle will make 2016 the best year to sell in the near future. Millennials emerged as a dominant force in 2015, representing almost one-third of the total US home sales. This pattern will continue in 2016 as their large numbers combined with improving personal financial conditions will enable enough buyers between ages 25 and 34 to move the market -- again. Financially recovering Gen Xers and older boomers entering retirement will also affect the market in 2016.

3. Builders will focus on more affordable price points. 

4. Higher mortgage rates wil affect high-cost markets the most. The move by the Federal Reserve to guide interest rates higher should result in a more reliable upward trend in mortgage rates. The effect will be minimal across the US as the move to higher rates will spur more existing homeowners to sell and buy before rates go even higher.

5. Already unaffordable rents will go up more than home prices. In more than three-quarters of the US, it is more affordable to buy than to rent. Rents are accelerating at a more rapid pace than home prices.