Lot’s of homeowners and would-like-to-be-homebuyers are asking me the same questions… What’s in store for 2015? My crystal ball is in the shop, so I turned to the National Association of Realtor’s ® for their input. An article on Realtor.com by Cicely Wedgeworth spells out the 5 Housing Market Predictions for 2015 .
1) Mortgage rates will head back up. We’ve been expecting this locally for a while now and continue to be surprised that interest rates continue to hover around 4%. The Fed Reserve is expected to raise the federal funds rate sometime mid-year which, indirectly, will cause mortgage interest rates to rise. Expect to see rates at 5% (5.25% if you listen to some lenders) by the end of next year. If you borrow $250K on a 30 year fixed interest rate loan at 4%, you monthly principal and interest payment is going to be $1,193.54. At 5% the payment is $1,342.05 or an additional $148.51/mo. That’s more than enough to push many Buyers right out of their window of affordability.
2) Millennials will set up house. Those born between 1981 and 2000 will make up an estimated 65% of first time home buyers and are expected to make up 2/3 of the nationwide household growth in the next 5 years.
3) Builders will break new ground. This may be more of a phenomenon in larger markets but I don’t think it will be much of that here locally. There are several contributing factors, lack of water being of the chief among them. (That’s a rant for another blog).
4) Credit Will be Continue to be a Major Factor. Strict lending regulations and income requirements will continue to hold the housing market back. See my post from 11/13 for the local market effects.
5) The end of the foreclosure crisis. The number of local foreclosures has decreased drastically over the last year and barring any further “help” from the federal government, we should return to normal levels over the next 12 months. That’s a bit of an oversimplification but I think you get the idea.
Anyway, the whole article is available by following the link above and it is always a good idea to get input from multiple sources. Thanks for taking the time to read this article and I hope it aroused some questions for you about What’s in store for 2015. Please feel free to reach out to me at any time because I’m just a phone call away!