As we enter 2015, potential home buyers and sellers alike are wondering what 2015 will look like for the US housing market. While we saw an uneven recovery from the 2008-2009 Recession in 2014, some analysts have expressed their real estate market predictions (2015) and they believe things might even out as economic and job growth continue to accelerate in the United States.
Fortune reported that we can expect three main things:
- Home price increases are likely to slow down, although affordability will decline.
- Mortgage rates are likely to rise.
- Millennials will demand housing which will help boost prices.
Housing Market 2015
As the industry continues to recover, prices in several major US housing markets have increased. The median sale price of single-family homes and condos in October 2014 reached their highest level since 2008. Nevertheless, experts agree that markets across the country will balance out and stabilize in 2015 with the rise in demand from the Millenial generation.
Newcomers to the market who are looking for affordable housing will create additional demand in 2015 that will continue to boost prices, albeit slowly. Coupled with an improved economy, economists believe 2015 will see a rise in earnest – an increase in mortgage rates.
It is important to note, however, that while the same prediction was made at the close of 2013 for the 2014 year, mortgage rates did not increase. Despite this, the Federal Reserve has shown that it will likely increase the federal funds rate which has remained near zero since 2008 – a move that will likely result in a mortgage rate increase in the coming months.
Real Estate Outlook: Millennials in the Mix
Jonathan Smoke, the chief economist at Realtor.com, argued that Millennials and other young people will “drive two-thirds of household formations over the next five years.” Smoke predicts 2015 will mark the first year that this generation will be felt within the US real estate market, especially in the Midwest and South where prices are more affordable.
The US Census announced late last year that those ages 23-24 now make up the largest bloc in the country, and as they begin to graduate college and look for homes, this bloc will drive two-thirds of household formations in the United States. Sellers looking to get their homes off the market may have better luck doing so if they market to Millennials.
"By the end of 2015, millennial buyers will represent the largest group of homebuyers, taking over from Generation X," says Stan Humphries, the chief economist for Zillow.com. "They prefer smaller units closer to the urban core, so it will be interesting to see whether they follow the time-honored path towards the periphery of the metro."
With the advent of newcomers to the market, Realtor.com believes we will close out the foreclosure supply. It has been seven years since the burst of the housing bubble and the resulting foreclosure boom, and 2015 will likely sell off remaining foreclosures – especially as fewer have been appearing on the market.
Do you want to discuss your real estate opportunities for 2015? Don't hestitate to contact The Atlanta Homes Team.