With 2016 well underway, it’s time to take a closer look at some of the trends that are developing and expected continue throughout the year. Here’s a look at the top 5 real estate predictions and trends for 2016.

New Cities on the Rise

Several “second-tier” cities, such as Austin, Nashville, Portland, Raleigh-Durham and San Antonio are expected to be particularly hot in 2016. Not only are these cities viewed as “hip,” but they also offer a lower cost of living than New York City, Los Angeles or San Francisco. Referred to as “18-hour cities,” these cities are also expected to see an increase in capital in-flow. Overall, capital flow into the U.S. real estate market is not slowing down, with total acquisition volume being $497.4 billion for the year ending June 30, 2015. This represents a 24.6 percent year-over-year increase. Most of this capital is expected to go to 18-hour cities as well as renovation projects and alternative asset classes.

Millennials Move to the Suburbs

While Millennials have been largely viewed as a generation that prefers urban living, many are starting to have children and feeling the need to move to the suburbs. In fact, one study recently found that six out of 10 Millennials plan to move to a detached single-family home within the next five years. Research also suggests that this generation will be looking for suburbs offering transportation options that keep them connected to big urban centers while replicating Main Street living.

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Shrinking Office Space

With the economy continuing to recover, the commercial sector is growing stronger as available jobs continue to grow. Open office plans are expected to continue to grow in popularity, with the square foot per worker expected to shrink from 253 in 2000 to 138 in 2020. Office vacancies are also falling, having dropped 90 basis points last year. Meanwhile, rent has increased 2.9 percent on a year-over-year basis and this trend is expected to continue.

Changing Housing Features

Homeownership has dropped in all age groups, with roughly 70 percent of people owning a home prior to the Great Recession to only 63.5 percent owning in the second quarter of 2015. This has resulted in a greater demand for rentals while also looking at ways to make homes more affordable. Developers are also finding that certain housing options that were once considered to be nice additions to a home are now considered “musts.” Meanwhile, reports indicate that we are likely to see an increase in the number of rooftop gardens and urban farms in homes.

Cutting Back on Parking

As ride-sharing and autonomous cars continue to change how we look at transportation, a growing number of developers are questioning the importance of creating surface parking lots and parking structures. This is particularly true in prime downtown areas where property is at a premium and could be better used in other ways. Government officials are also getting on board with these changes, with zoning regulations evolving to reflect this shift in thinking.

To learn more about real estate trends for 2016, particularly as they relate to Southern California, contact our team of professional real estate experts. We specialize in high-end properties in the area’s most exclusive communities.

  1. 4 beds, 6 baths
    Home size: 5,660 sq ft
    Lot size: 7,088 sqft
  2. 5 beds, 4 baths
    Home size: 3,730 sq ft
    Lot size: 9,421 sqft
  3. 8 beds, 8 baths
    Home size: 6,914 sq ft
    Lot size: 27,536 sqft
  4. 2 beds, 3 baths
    Home size: 2,344 sq ft
  5. 2 beds, 3 baths
    Home size: 3,358 sq ft

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(all data current as of 10/18/2017)

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