2015 Single Family Home Forecast

Granada II Front Elevation ResizeAccording to Melissa Dittmann Tracey with REALTOR® Magazine, the real estate market is expected to build momentum across most price points and stabilize over the next year due primarily to a rebounding economy.  Parts of this study are quoted verbatim.  Here are some positive trends that we are expecting to see.

  1. Overall employment is on the rise.  According to the study, their is a forecasted addition of 2.5 million jobs next year with an addition increase in household formation, will likely drive more first-time homebuyers into homeownership, according to realtor.com projections.
  2. According to the study, “The double-digit price increases in 2013 have slowed, and stable growth was the trend in 2014. As investors retreated from the market, so have the rapid home price increases. Prices are expected to continue edging upward in 2015, with realtor.com predicting a 4.5 percent price gain.”
  3. According to Melissa Dittmann Tracey, “Interest rates over the past few months have been dipping below 4 percent, lowering the borrowing costs of homebuyers and refinancing homeowners. However, mortgage rates are predicted to rise this year. Freddie Mac projects mortgage rates will likely average 4.6 percent but inch up to 5 percent by the end of 2015.”
  4. New programs with lower down payments are popping up to help more buyers buy homes. In early December, Freddie Mac and Fannie Mae announced conventional loan down payment programs that will allow qualified first-time buyers to secure a fixed-rate mortgage with a 3 percent down payment. Prior to that, they needed at least 5 percent.  Also, “there are many states as well as national programs, which offer grants that range from 1 to 5 percent to be used for a down payment or closing costs,” writes Damian Maldonado, co-founder of American Financing Corp., at CNBC. “These easing loan standards will allow more first-time buyers to enter the market.”
  5. Affordability for homes, based on home-price appreciation and rising mortgage interest rates, will likely fall by 5 percent to 10 percent in 2015, according to realtor.com forecasts. However, the decline in affordability could be offset by an increase in salaries for many households. “When considering historical norms, housing affordability will continue to remain strong next year,” realtor.com notes in its report.
  6. Single-family new-home starts barely budged in 2014 compared to 2013, and new-home sales remain far from normal levels. But that could finally turn around in 2015. New-home sales are expected to rise 25 percent as single-family construction picks up traction in 2015. The National Association of Realtors  projects single-family housing starts will rise to 820,000 in 2015, though that number is still below the 1 million historical average.
  7. According to Melissa Dittmann Tracey, “The number of foreclosures is expected to continue to fall in 2015, but expect them to still be elevated in some pockets across the country – particularly in judicial states, such as Florida, where foreclosures must wind through the courts.”  Foreclosure filings declined for much of 2014. From January through November, foreclosure filings fell about 172 percent compared to the same period one-year prior, according to RealtyTrac data.
  8. Oil prices have plunged 45 percent since June, which could inadvertently provide a lift to the housing market. “Households in the U.S. spend more than $1,800 on energy-related costs annually, and 22 percent of that energy consumption is due to residential real estate,” according to Core Logic’s 2015 Housing Outlook. “So while the drop in oil prices typically has been linked to a reduction in driving-related expenses, it clearly also reduced energy-related expenses for residential real estate.”
  9. An increase in rental costs in 2015 will likely outpace annual home-price gains. Expect the rental market to remain a “landlord’s market” in 2015, with vacancy rates expected to stay below 5 percent, according to the NAR. That should lead to demand pushing rents up even higher and keeping them above inflation, notes NAR Chief Economist Lawrence Yun. Apartment rents are projected to increase 4 percent once 2014 numbers are released, and 4.1 percent in 2015.
  10. A stronger economy will probably have an increase housing demand in 2015. “Overall, the economy finally appears to be gaining enough momentum to help provide the support that the housing market (needs) for a stronger recovery,” Sam Khater, deputy chief economist at Core Logic, notes in the company’s 2015 Housing Outlook. As proof, he cites the “combination of stronger employment growth and especially Millennial (under the age of 30 years old) job growth.”

Thinking of buying a new home?  You should consider using a realtor.  f you are interested in buying real estate (new home or investment property), please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida  33511). As a life long resident of Central Florida, I can help you find the right property for you whether it is in Lakeland or as far south as Sarasota.  The Keller Williams offices of  ”Suburban Tampa” include the offices in Brandon, Plant City, Fishhawk Ranch, and our newest office in Valrico.  My email address isalanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.


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