That’s what I learned from the article posted at realtors.org. It seems really upbeat and encouraging but it’s just predictions and assumptions. Let’s check something out.
After a slowdown in the market this year, housing analysts and economists have high hopes for 2015. The real estate market is expected to build momentum across the board nest year, mostly because of a strengthening economy.Here’s a recap of some of the real estate forecasts for 2015:
Millennial force: Younger professionals are having more luck in the job market, which is expected to help more of them jump into home ownership in the new year. Overall, employment is on the rise, but jobs for Millennials — particularly those aged 25 to 29 — has risen by 3 percent. That’s one percentage point above the nationwide rate. According to some forecasts, Millennials are expected to drive two-thirds of household formations over the next five years. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, will likely drive more first-time home buyers into home ownership, according to realtor.com® projections.
Home prices stabilize: The double-digit price increases seen in 2013 have slowed, and more stable growth was the trend in 2014. As investors have retreated from the market, so have the rapid home prices in many markets. Home prices are expected to continue to edge up in 2015, with realtor.com® predicting a 4.5 percent gain. “After two years of abnormally high levels of home-price appreciation in 2012 and 2013, price increases moderated throughout 2014,” realtor.com® notes in its 2014 Housing Review. “We are now experiencing increases in home prices consistent with long-term historical performance.”
Mortgage rates rising: Interest rates the last few months have been dipping below 4 percent, lowering the borrowing costs of home buyers and refinancing home owners. However, don’t expect the low rates to stick around much longer. Mortgage rates are expected to rise next year. Freddie Mac projects mortgage rates will likely average 4.6 percent but inch up to 5 percent by the end of 2015.
Return of the 3 percent down payment: New programs are popping up to help more buyers break into home ownership with lower down payments. In early December, Freddie Mac and Fannie Mae announced conventional loan down-payment programs that will allow qualified first-time buyers to secure a fixed-rate mortgage with a 3 percent down payment. Prior to that, they needed at least 5 percent. Also, “there are many states as well as national programs, which offer grants that range from 1 to 5 percent to be used for a down payment or closing costs,” writes Damian Maldonado, co-founder of American Financing Corp., at CNBC. “These easing loan standards will allow more first-time buyers to enter the market.”
Housing affordability declines: Affordability for homes, based on home-price appreciation and rising mortgage interest rates, will likely fall by 5 percent to 10 percent in 2015, according to realtor.com® forecasts. However, the decline in affordability could be offset by an increase in salaries next year for many households. “When considering historical norms, housing affordability will continue to remain strong next year,” realtor.com® notes in its report.
New-home sales rebound: Single-family new-home starts barely budged in 2014 compared to 2013, and new-home sales remain far from normal levels. But that could finally turn around in 2015. Sales of new homes are expected to rise 25 percent as single-family construction picks up traction in 2015. The National Association of REALTORS® projects single-family housing starts to rise to 820,000 in 2015, which is still below the 1 million historical average. In the latest new-home report, sales dipped 1.6 percent in November, but builders are remaining optimistic heading into the new year. “As the labor market and broader economy continue to strengthen, we can expect the housing sector to gain momentum heading into next year,” says David Crowe, chief economist for the National Association of Home Builders.
Read the remaining reasons at realtor.org
Let’s hope for another great year for housing and consumers…
Happy New year to all!!!