Realtor.com Chief Economist Jonathan Smoke states that 2015 is the year of recovery, and there are several factors at play that will make 2015 a better year for real estate:
1. Lending is becoming less restrictive, and programs are launching that set the stage for more homebuyers to qualify. The volume of homebuyers has diminished because of tight lending, but Smoke says they’re about to make a healthy comeback.
2. 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.
3. 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 percent by the end of 2015.
4. Smoke forecasts that home prices will continue to rise, increasing 4 to 5 percent in 2015.
5. 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 is poised to be the year of real estate, challenges remain. Smoke notes that inventory levels will remain tight, and although lending is loosening, it won’t be a cakewalk. Furthermore, mortgage rates will rise, so buyers entering the market will see increasing monthly payment amounts. Most other factors are projected to improve the market.
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