2015 has begun. A new year, new resolutions, and new predictions. What will the new year bring for the housing market?
The outlook on the housing market is definitely brighter. After all, 2014 was the best year for the U. S. economic recovery since 2008-2009. With an accelerating economy fueling job and income growth, prospects are good for homeowners and would be home buyers.
1. Mortgage Rates Will Head Back Up
The flip side of the improving economy is that mortgage rates will inevitably head up again. We've had a great run, but the honeymoon is over. It's time to settle in for a relationship that balances job growth with higher, but still reasonable interest rates.
The Federal Reserve has indicated it will raise the federal funds rate, that indirectly affect interest rates. This rate has been near zero since December of 2008.
2. Millennials Will Set Up House
The millennial generation is beginning it's ascent. Some are still struggling with the housing market, and living with their parents to pay off student loans, but not all. With the improvement in the job market, older millennials are planning ahead. The older millennials (25-34) are at the age when many marry and start families.
More than 2/3 of household growth in the next 5 years is expected to come from millennials.
3. Builders Will Break New Ground
The forecast is for an increase of 16% in housing starts in 2015, shifting from multi family properties back to single family homes.
4. Credit Will Continue to Be a Major Factor
Strict mortgage qualification standards are keeping many consumers, especially younger ones, from buying a home with a bank loan. The situation has remained about the same for the last 4 years. it's possible that various new federal housing policy initiatives might help loosen those standards in 2015.
5. We'll Close Out the Foreclosure Crisis
It's been 7 years since the housing bubble burst and foreclosures skyrocketed, but in 2015 we'll see the end of the era. In 2014 we already saw a great improvement in the composition of sales. There are fewer foreclosures and short sales in the mix. Foreclosure inventories were down 30% in 2014, and expected to continue to fall to more normal levels.
While these trends will be apparent nationwide, housing is still a local issue. The situation is different in each market. A current appraisal of your home will help, along with the experience of a real estate professional if you decide to sell or buy