2015 real estate market trends
The last six years have been tumultuous at best as our nation has been left picking up the pieces of a rather dramatic housing crash. Homeowners have been underwater for some time, and many would-be buyers have been pushed out of the market by overly tight lending conditions and higher down payment requirements. Foreclosures caused values in neighborhoods to suffer, some even turning into blight homes, abandoned for years.
But the pendulum has been very slowly swinging, and the slow-paced recovery has been in progress for some time. Our nation will not be going back to mortgages given without any income proof, and robo-signing mistakes are finally being rectified, and we’ve learned some important lessons as a culture. Now, we’re finally getting our heads above water, and while we’re not exactly walking on water, many people are in a better situation economically than they were just a year ago.
We’re not alone in our analysis that the housing market is in a slow pace of recovery, in fact, realtor.com Chief Economist, Jonathan Smoke states that 2015 is the year of recovery, and that unless you are in some isolated areas in the slower moving Judicial states, we can can close the book on the foreclosure crisis.
Smoke notes that there are several factors at play in 2015 being a better year for real estate:
- Lending is becoming less restrictive, and programs are launching that set the stage for more home buyers to qualify. The volume of home buyers has diminished because of tight lending, but Smoke says they’re about to make a healthy comeback.
- New home construction (one of the hardest hit sectors of the economy) is rebounding, and even though lot availability is limited and labor and material shortages are a challenge, he expects single family starts to grow 21 percent.
- Contrary to his and other analysts’ projections, mortgage rates remained at historic lows in 2014. Because of moving pieces at the federal level, they aren’t likely to stay down, and Smoke projects they’ll reach 5.0 percent by the end of 2015.
- Smoke forecasts that home prices will continue to rise, increasing 4.0-5.0 percent in 2015.
- Millennials will play a bigger impact in the housing market, as they’re finally benefiting from a recovering jobs market and moving out of their parents’ homes. Gen X will sit tight, and Boomers will continue to downsize as their lifestyles dictate.
Although 2015 year is poised to be the year of real estate, challenges remain.
Smoke notes that inventory levels will remain tight, and although it is loosening, lending won’t be a cakewalk. Further, mortgage rates will rise, so buyers entering the market will see increasing monthly payment amounts. Most other factors are projected to improve the market.
In a video interview, Smoke answered dozens of questions posed on Twitter with the #HousingStarts hashtag (where questions are still being asked and answered). If you’re considering buying or selling, or if you’re in the industry, watch this over your lunch break to get all of the nitty gritty details and know more than your neighbors about the market: