The new year is upon us yet again, and the outlook for the real estate and mortgage industry is looking bright. Increasing economic recovery has led to job and income growth making 2015 a great time to enter into the housing market. Here are some housing market predictions for the upcoming year.
The Millennial Generation will move the market.
One of the most common predictions amongst real estate experts is that the millennial generation will fuel the purchase market. Buyers that are ages 25-34 make up 65% of the first time buyer demographic. The older members of the Millennial generation are at the age of marrying and starting a family. Many of them have been planning ahead and saving in preparation of buying a home. The increase in household income coupled with job growth will help this generation to become qualified for mortgages.
However, many Millennials are still demanding real estate in areas that they cannot afford, such as the San Francisco and Washington DC metropolitan areas. The areas that will see the largest effect from Millennials is in the Midwest and the South.
Rates will increase.
As it has been forecasted for the past few years, economic experts are in agreement that interest rates will increase in 2015. It is expected that the Fed will increase the prime rate toward the end of the year and the mortgage industry may increase before that. However, this doesn’t mean that the real estate market will be impacted negatively. People still need housing and historically speaking, interest rates are still quite low.
Credit will continue to be a big factor.
Federal regulations have made qualifying for a mortgage difficult. The Consumer Financial Protection Bureau has created strict income and credit qualifications for mortgage lenders to adhere to. Good credit standing will continue to be a big factor in mortgage approvals. While this may be difficult for individuals looking to enter into the housing market, it is beneficial to the economy as a whole. These regulations protect against future mortgage delinquency and foreclosure.
Boomerang buyers will enter back into the market.
In 2015 the real estate market will edge out of the foreclosure crisis. Each year delinquency rates have been steadily decreasing and it has been 4-5 years since the height of the foreclosure crisis. Many boomerang buyers will become homeowners once again in 2015. They have waited the 4 plus years to become qualified again for a mortgage. In that time they have experienced job and income growth and have saved for a larger down payment this time around. Affordable home prices and strict lending guidelines will protect these buyers from making the same costly financial mistakes again.
For expert guidance and opinion on the housing market predictions, contact Aceland Mortgage.