Zillow Predicts 2016.
Love it or hate it, Zillow is here to stay. Sometimes their valuation on an individual home price can be way OFF. Sometimes they are accurate. For sure they have a HUGE database and may be able to spot trends. Nationally they see home values going up 3.5% in 2016. I think the Reno area will at least double the national number.
Check out these five Zillow 2016 housing market predictions and get ready for the year ahead.
Rent has become increasingly unaffordable.
The question isn't "Why don't millennials want to buy a home?" It's "When and what can they afford to buy?"
The issue facing first-time home buyers is whether it's more economical to continue renting or to make the leap and purchase a home. To help determine that, renters need to identify their breakeven horizon - the number of years they will need to own and live in a home until it becomes more financially advantageous than renting the same home. Current renters spend roughly 30 percent of their household income on housing; home buyers spend about 15 percent of their monthly income on a mortgage payment for a typical home.
Although 20 percent is a recommended down payment, the graph below shows that even assuming only 5 percent down and a 6 percent mortgage interest rate, the break even horizon is just short of four years, and rental costs are still remarkably higher than home ownership costs by about $300,000 over 20 years.
Best Regards, Kelly