Housing Market Predictions for 2015
In 2013, the housing market was anything but stable. The housing industry faced several drawbacks, ranging from slow sales to practically no sales at all. The signals are confusing, as the market for new home sales fluctuate. Economists describe the shifting of the housing market as the new norm. At the same time housing experts say that home seekers can expect at least 11 new changes in the housing market in 2015:
Slow Increase in Prices
Real estate sites like Zillow predicts that home prices will increase an average of 2.5% in 2015, while sites like Realtor.com predicts between 4% to 5% annual gain in 2015. However, the slow increase is due to the exit of investors from the housing market, and a trajectory shift of a rapid recovery phase.
Less Affordable Housing Prices
The cost of homes will undoubtedly rise beyond the increase in income
Despite the availability of homes, affordability does not equal ownership. The cost of homes will undoubtedly rise beyond the increase in income. What does this mean for potential homeowners? It means that any increase in their wages is not enough to meet the rising cost of mortgage payments. According to Realtor.com affordable housing will decrease in 2015 by 5% to 10%.
Buying Frenzy will Cease
When housing prices rose in 2014, numerous people were ready to sell their home. With an outrageous price increase, there were less bargains on the housing market, which was unappealing to many investors. With investors out of the way, individuals are left to purchase their homes at much lower rates, and sellers can keep most of their profits.
Mortgage Interest Rates will Increase
Both Freddie Mac and The Mortgage Bankers Association predicts an increase in mortgage rates by at least 4.5% to 5% in 2015. The MBA feels certain that the recession over, and is no longer a threat to what is about to come next. In the middle of 2015, mortgage interest fees are expected to rise.
Millennials Will Take the Lead in Home Buying in 2015
As the millennial group of individuals age 35 through 50 mature, they will certainly become the largest group of homebuyers in 2015. An estimated 42% of Millennials wants to buy their first home within the next five years. This number is in comparison to Generation X, which cornered the housing market for decades. The two key ingredients that fuels the Millennials decision to purchase their first home are the delay of marriage and children.
High Rent Forces Quick and Timely Home buying Decisions
Millennials ages 25 through 34 will come together to form households to rent and not buy. This need is based on their plan to save money for a down payment. As these types of households form, landlords will continue to increase rental payments up to 3.5% in 2015. In fact, the high cost of rent will push these households into becoming home buyers.
Mystery Lies Ahead for Housing Market in 2015
When David Blitzer, Chairman of Standard and Poor’s Index Committee was approached to describe the housing industry in one word, all he would say was, “Mysterious”. The Fortunate expert states that even the experts are not 100% sure, what the real estate market holds for the future.
Single Dwelling Construction will Rise
According to BuyMyHouse.com, younger adults or Millennials prided themselves on living in luxurious and expensive homes. Since the construction of single family homes is making a comeback, more Millennials are demanding single family built homes, and they are moving to areas states like New York, Austin and Honolulu.
Foreclosures Have Fallen Dramatically
According to Thornberg, an expert of RealtyTrac Foreclosure News Report, foreclosures are down. Buying and renting homes for profits are slow, as this part of the housing industry remains weak. Smoke another housing expert at RealtyTrac Foreclosure News Report stated that he had strong expectations of labor growth, in addition to lower home prices regarding appreciation. According to Yun, another housing expert; the sales of existing homes will increase by 7%, while the increase of new homes will reach up to 10%. Overall, housing experts and economists are optimistic about the increase in home sales and new construction. The baby boomers homeownership prediction rate is declining as a new generation of homebuyers emerges. Long term loans, alternative financing and extended credits are factors that will drive banks to do business with qualified applicants. Freddie Mac and Fannie Mae offer a new program which will allow first time homebuyers to pay a low down payment of 3%. Experts at RealtyTrac agrees that foreclosures in the past was not due to low down payments, but by individuals who borrowed more than they were able to pay back. When mortgage companies and top market housing industries implement and maintain rational debt services that monitors income ratio, foreclosures are less likely to occur. The hottest top markets to look for in 2015 are Atlanta, GA, Denver, CO, Washington, DC, Minneapolis, MN, Des Moines, IA, Dallas, TX, San Jose, CA, and Houston, TX.
