What a great month it is here in Vail! This February, we have seen more snow and powder ski days than ever! It is a great time to come out and ski – make your plans before it is over!
As well, get ready to break out the Cristal: We had a great 2015—the best year for housing since 2007. Per realtor.com, it is projected that we will have an even better year in 2016. Why? With economic growth chugging along, employment will continue to increase, meaning that people will have more money coming in and they’ll be able to buy those second ski homes and starter condos here in the Vail Valley.
Here’s a closer look at the trends that will have the greatest impact on the housing market in 2016.
1. We’ll return to normal (Anyone remember normal?)
The year ahead will see healthy growth in home sales and prices, but at a slower pace than in 2015. This slowdown is not an indication of a problem—it’s just a return to normalcy. We’ve lived through 15 years of truly abnormal trends, and after working off the devastating effects of the housing bust, we’re finally seeing signs of more normal conditions. Distress sales will no longer be playing an outsized role, new construction is returning to more traditional levels, and prices rise at more normal rates consistent with a more balanced market.
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 2 million sales, which is more than one-third of the total. 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. The majority of those buyers will be first-timers, but that will require other generations to also play larger roles. Two other generations will also affect the market in 2016: financially recovering Gen Xers and older boomers thinking about or entering retirement. Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers. Gen Xers are in their prime earning years and thus able to relocate to better neighborhoods for their families. Older boomers are approaching (or already in) retirement and seeking to downsize and lock in a lower cost of living. Together, these two generations will provide much of the suburban inventory that millennials desire to start their own families. Assuming that most of these households will both sell and buy, it is important to recognize that 2016 is shaping up to be the best year in recent memory to sell. Supply remains very tight, so inventory is moving faster. Given the forecast that price appreciation will slow in 2016 to a more normal rate of growth, delaying will not produce substantially higher values, and will also see higher mortgage rates on any new purchase.
The housing crisis that politicians are ignoring is that the cost of rental housing has become crushing in most of the country. More than 85% of U.S. markets have rents that exceed 30% of the income of renting households. Furthermore, rents are accelerating at a more rapid pace than home prices, which are moderating. We’ve been seeing asking rents on vacant units increase at a double-digit pace in the second half of this year. Here in the Vail Valley, a rental will become available and within hours is taken. Definitely not enough rental choices here. Because of this, it is more affordable to buy here in the valley, as well as in more than three-quarters of the U.S.
So with all the new snow, good news about the real estate market – now is the time. Ski, Enjoy and Consider your Choices to purchase here in the Vail Valley. We are no longer in a lowball real estate market – sellers are holding their prices and buyers that see the long term values are buying them.
Stop by and see me any time at the Four Seasons Slifer, Smith & Frampton office here in Vail Village.
Liz Leeds…Others Follow!
2/7 Super Bowl Sunday!
2/12-15 PrezFest Beaver Creek
2/14 Valentine’s Day!
2/19-21 Winter Wonder Grass Music Festival in Avon
2/20 Talon’s Challenge, Beaver Creek
2/27-28 Skijoring in Munturn
2/29 Burton US Open Begins
Liz Leeds * LizLeeds.Com * FourSeaonsVail * firstname.lastname@example.org * 970-331-1806