2016 has been a tumultuous year for the real estate sector, with the presidential election, Federal Reserve rate hike, and Brexit-spurred interest fluctuations all impacting the housing market in ways that are still playing out. As the new year looms, trends that will shape the industry’s coming months are at the forefront of everyone’s mind.

A Diversifying America

Over 50% of new home formulation is expected to happen in minority communities, according to a recent interview with Quicken Loans CEO Bill Emerson. The changing face of the mortgage industry’s clientele demands new and innovative ways of serving homebuyers. Lenders are seeking to attract more Millennial and minority borrowers with new cost-effective programs like Wells Fargo’s YourFirstMortgage, which provides first-time or low-to-moderate income (LMI) buyers incentivized rates and user-friendly features. Real estate professionals must follow suit. Adapting hiring and marketing practices to serve a wide, diverse constituency is a natural solution to expanding both customer base and profit margins.

Affordability Crisis?

Housing prices have seen a jump across the nation over the last year, but income rates have failed to follow suit. This is seen by many as the sign of an upcoming affordability dilemma: homeownership rates have strengthened but not fully recovered since the 2008 financial crisis, and a steady rise in the ticket price of both new and existing properties will hardly help. Whether the problem is due to supply or demand, real estate professionals will have to keep a close eye on housing metrics and associated data to guide their strategies going forward.

Data Security

Finally, with the Internet an ever-increasing factor in mortgage transactions, lenders and realtors alike must strengthen their cyber-security protocols. The news has been filled with data breaches over the last few years, with the infamous hack of healthcare provider Anthem’s internal records leaking the private information of nearly 80 million users. The medical industry is particularly susceptible to these attacks due to the large amount of sensitive data their systems house. The same holds true for realtors, who thanks to the TILA-RESPA Integrated Disclosure (TRID) rule must now follow an exacting set of standards for providing client information at closing. With the Social Security numbers, birth dates, credit scores and other data of their customers at stake, real estate offices should take top-to-bottom security measures in both their IT and human resource departments.

Demand for residential real estate was at near historic records throughout the summer of 2016. With buyers clamoring to snap up the available properties, prices predictable skyrocketed in many markets in the United States.

While the fall season is typically a slower one for the real estate industry, the activity in the market over the past few months, and the latest demand and inventory data, seems to be pointing toward a hot autumn for home sales.

According to a September report released by realtor.com, property transactions in the ninth month of 2016 were four percent higher than they were in the same timeframe in 2015. Meanwhile, prices continue to reach new highs rather than rebound back to normal averages.

Digging deeper into the latest realtor.com report, we see that the expected median age of listings — a key metric that provides an accurate measurement of real estate inventory — is three days lower than it was in September 2015. At 77 days, the September 2016 median listing time is still about five days longer than it was in August 2016. The month-to-month drop simply shows that the typical fall slowdown is occurring, just not at a rate that bringing the market back down from some of its historic highs.

Overall inventory continues to be much lower than it was at this time last year. Fewer than 450,000 new listings entered the housing market last month.

The median home listing price was $250,000, which was almost 10 percent higher than it was in September 2015 and unchanged from the figure in August 2016. This shows that average time on the market may be slowing down as we head into fall, but home prices are staying steady at extremely high levels. The $250,000 marks an all-time high for September.

Why Are Prices and Demand Still So High?

According to the chief economist of realtor.com, the market isn?t slowing down as much as it usually does in the fall because there are still plenty of summer buyers waiting to reach their goals. Many of these market participants were temporarily blocked from buying properties by the fierce competition that played out in June, July, and August. They didn?t give up; they just put off buying a property until September or October, hoping that they would find fewer competitors.

Pent up demand is combining with near record low mortgage rates to continue to drive a hot real estate market well into the fall months.

Acuity National Real Estate Solutions

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Affordable housing options in the U.S. are declining. ATTOM Data Solutions tracked 414 counties across the country and found that 24% of them were less affordable than their historic average in the 3rd quarter of 2016, up from the 22% mark in the 2nd quarter and 19% a year earlier. The 24% share was the highest since the 3rd quarter of 2009, when a staggering 47% of markets fell below their historic affordability averages.

Affordability Suffers

The affordability index is based on the share of average wages (from the U.S. Bureau of Labor Statistics) that is required to make monthly payments on a home at the median price as determined by publicly recorded sales deeds. That payment is made up of principle, interest on a 30-year fixed rate mortgage with a 3% down payment, and includes property taxes and insurance.

The improving affordability trend has reversed course following home price appreciation acceleration and wage stagnation. Nationwide, average weekly wages declined in the 1st quarter of 2016 after 13 consecutive quarters of year-over-year increases, according to Daren Blomquist, senior vice president at ATTOM. As a result 63% of markets saw worsening affordability.

A Silver Lining

There is a silver lining though, as some of the highest-priced markets, generally bastions of low affordability, actually improved in the index, mostly due to annual home price appreciation slowing to single-digit percentages. This is good news for prospective buyers who have been priced out of those expensive markets.

261 counties, or 63% of the field, suffered worsened affordability levels compared to a year ago. 368 counties, or 89%, saw annual growth in median home prices outpace annual growth in weekly wages.

Since the 1st quarter of 2012, when median home prices bottomed out nationwide, they have risen 60% while average weekly wages have only risen 6% over the same timeframe.

Recovering Counties

Across all 414 counties analyzed, earners must spend 36.3% of their income to buy the median-priced home, still a bit below the historic average of 38.8%, but above the 35.8% mark from a year ago. A few counties that rose well above the national average were Kings County, NY (Brooklyn) at 123.5%, Santa Cruz County, CA at 111.1%, Marin County, CA at 109.4%, New York County, NY (Manhattan) at 96.6%, and San Luis Obispo County, CA at 91.2%.

The ATTOM analysis used closings costs data from ClosingCorp that include title, settlement services, transfer taxes, appraisal, home inspection and recording fees. The report found that average closing costs for 2016 sales were $3,815, an average of 1.8% of the median sales price in each county and 8% of the annual wages in each county.

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