If 2015 was the year for the housing market to recover, then 2016 will be about creating affordable homes. The upcoming year will see some challenges in making homes affordable for first-time homebuyers. With the lack of reasonable home prices near major metropolitan areas, first-time home buyers are being pushed out to the suburbs.

As home prices are starting to see a steady increase in the hot coastal markets, young professionals and first-time buyers searching for a new home will have to leave the city and look for “mini-cities,” suburb communities offering an urban feel and that provide plenty of amenities within walking distance.

Key Predictions on the 2016 Housing Market:

1. New growing suburb markets will pop up as home buyers move outside cities to find affordable homes.
2. The average age of first-time home buyers will increase in 2016. In 2015, the average first time home buyer was 33 years old.
3. Home prices will increase by around 3.5%.
4. As home prices increase faster than incomes, more low-income Americans will be unable to afford homeownership.
5. 2016 will see the highest cost of rent.

On the bright side, over 5.4 million existing single-family homes are predicted to be sold in 2016. That is up by a million homes estimated sold in 2015. While home sales will continue to grow in 2016, the lack of first-time buyers and rising mortgage rates will make for some challenges for home builders.

The median price of new homes should grow at an annual rate of 5%, which is down by 1% of the average price this year. The rising home prices will become one more obstacle for first-time buyers, as well as the 30-year fixed mortgage rate rising to 4.5%.

The good news is, as young adults who can’t afford home ownership flood the renting market, rising rents will force those who can afford a home, to stop delaying in homeownership.

Although 2016 will not see a housing boom, it will see a slow and steady real estate market.