2015 proved to be a strong year for the real estate industry. And according to real estate predictions for 2016, this year is poised to come close—or perhaps even exceed—last year’s success. However, that doesn’t mean the industry isn’t facing some challenges this year. The National Association of Exclusive Buyer Agents (NAEBA) reached out to its members across the U.S. to gain some insight on the matter. Regardless of their local market, respondents pointed to these three areas of concern for 2016.
1. Too few homes on the market
Resoundingly, respondents believe that a lack of inventory coupled with an increase in buyers will be challenging for even top agents. “Low inventory and crushing demand mean most sales will be bidding wars, over asking prices, and giving up some buyers’ rights,” says one agent.
Another agent adds, “[It will be to] hard to find a house, and when they do, they may have to fight for it. Getting a down payment and having money for your own closing costs will be a huge advantage.” But it’s not always possible for buyers, especially first-time buyers.
2. Prices of homes continue to rise
When inventory levels drop, prices rise. Many respondents cited affordability as a big issue this year. “As the entire country seems to be in rebound mode from the housing debacle, deals are getting harder to come by, and prices are rising,” says an agent. “Buyers will still buy, but they won’t get the deals they were used to getting a few years ago,” warns another.
3. People are still unsure about the economy
No doubt we’ve seen remarkable gains in the real estate market and other sectors in recent years. However, fears still linger. “Honestly, with what is going on with the political campaigns, I’m not sure what the rest of 2016 will bring for real estate buyers. I’ve had a slowdown in inquiries and am wondering if people are waiting to see where this country is going before making a decision to buy or move. The buyers I am working with seem more hesitant and uncertain, without sharing what is making them so. Since I never discuss politics with buyer-clients, and won’t start now, I can only conjecture,” laments one agent, and many more agree.
Several believe that buyers are sitting tight waiting to see what will happen this election year before making a life-changing decision.
What does all that mean to you? Buyers will have to get creative with pricing and terms when it comes to beating out other bids, and you need to be prepared to advise them on those decisions.
“It may be more important now than ever that they receive full representation from their real estate agent. They will need an experienced agent who will help them make a good offer quickly or they will lose out on the home they want. They will also need an experienced negotiator to ensure they don’t overpay for the home, especially in this climate of increasing prices and economic uncertainty,” advises NAEBA Executive Director Kimberly Kahl, CAE.
For more real estate predictions, check out our previous post: Real Estate Trends to Watch in 2016. Interested in growing your real estate knowledge and expertise? Learn about Real Estate Continuing Education Courses at McKissock.