Five Specific Predictions for 2015’s Housing Market
There are specific predictions for 2015’s housing market that stand out. Although experts are going to have differing opinions, most agree on the five provided.
The first prediction for the housing market next year is that in addition to a stronger economy there will be a much stronger home purchase market. At this time, it looks like the United States economy is in a great position to sustain growth of around 3 percent.
As stated by Frank Nothaft, chief economist with Freddie Mac, reduced energy costs bolster better consumer spending, as well as business investment. As a result, credit conditions for real estate lending are eased, which helps boost consumer confidence for higher income jobs that in turn provide support for household formations.
Another prediction for 2015 pertaining to the housing market is that sometime next year the Federal Reserve will increase interest rates. Just recently, interest for a 30-year fixed-rate mortgage (FRM) fell below 4 percent. However, according to Freddie Mac, a giant government lender, the average interest rate next year will be at 4.6 percent and toward the end of 2015, edge closer to 5 percent.
Cost of Homes
Experts are also keeping a close watch on home prices. At the end of this year, home appreciation will probably have slowed to around 4.5 percent, this down from last year’s 9.3 percent However, a further drop in appreciation is expected to about 3 percent for 2015. With appreciation and mortgage rates climbing, affordability will become a challenge for some homebuyers.
New Home Construction
Something else to consider for next year is how well new home construction will do. Experts believe there will be a boom of homebuilding next year and compared to rates in 2014, this sector could see a substantial 20 percent jump. If this occurs, it could push total home sales to roughly 5 percent, which would set a pace for best sales over and eight-year period.
The fifth prediction for 2015’s home sales has to do with both single and multifamily mortgage originations. Slipping an additional 8 percent will be originations for single-family homes, which is due to a major decline in the volume of people refinancing. In 2015, refinancing loans will only account for about 23 percent of mortgage originations, which in recent years had made up more than 50 percent.
As far as multifamily mortgage originations, these have surged approximately 60 percent from 2011 through the current year. Into 2015, increases should continue with the anticipated jump reaching 14 percent.
Of course there are additional predictions for the housing market next year but the five things listed are what the majority of real estate experts and analysts are watching most. There will be some challenges in 2015 but overall, the housing market is expected to flourish in many cities throughout the country to include Denver, San Jose, Los Angeles, Phoenix, Des Moines, Minneapolis, and others.