While the current housing market is still hot, future forecasts show the housing market is likely to cool off a bit. The pace of home sales is expected to slow down, and there will be fewer homes for sale. Additionally, a large percentage of millennials are hitting prime homebuying years. These two factors should make the housing market less frenetic in the coming years. This is great news for buyers, but it is also good news for those who are looking to sell.
Increasing home prices and rents will continue to pose challenges for the housing market, but they will provide advantages for those who can afford to move. For instance, wages are projected to increase by 3.3%, which will make housing more affordable for more people. With this, the total purchasing market will remain relatively stable. Another positive factor for home buyers is that all-cash offers will increase. This will make it easier for buyers to buy a home despite the increased competition.
Rising rents and home prices will create a new set of challenges for homebuyers. As wages and employment rise, more people will be able to afford to live farther from the office. A competitive jobs market will also benefit home shoppers, as more people are able to work from home, reducing the need to commute to a downtown office. The increase in affordability is the result of these trends, but they are still a good sign.
Despite the challenges of the current housing market, the outlook for the housing market is still very promising. The cost of living is expected to increase by 7.1% over the next five years. The U.S. unemployment rate is at a 52-year low, and interest rates are still at historic lows. Those who buy a home will have greater options in their neighborhoods. Further, the demand for real estate will continue to increase.
While housing prices and rents are on the rise, the shortage is unlikely to be an impediment to homebuyers. While the lack of affordable housing can make a buyer feel compelled to buy a home, it is also likely to lead to a higher price tag. And in most cities, affordability is a significant barrier for buyers. Luckily, California’s aging population will attract more immigrants in the future, creating positive growth for property owners and property managers.
The shortage of housing will likely keep the market competitive for the next several years. The shortage will continue to be exacerbated by a tighter job market. However, the lack of housing inventory will likely remain the biggest barrier to home purchase. Although housing starts will slow the rate of price escalation, the work-at-home trend will increase. Consequently, more people will be living in more desirable areas.