Year 2014 is coming to an end and we have already started to chalk out our new year plans. 2014 have witnessed many ups & downs in economical, political & social sectors. Some incidents have good outcome, some were worse. The housing market of U.S was also affected from it. But at the threshold of 2015, can we expect for a brighter image for the housing market?
There are some expert economists who have made the following projections for 2015:
1.Mortgage interest rates: Mortgage interest rates will be high in 2015. Currently, the 30-year FRM is going below 4%. But according to Freddie Mac, mortgage rates will go to 4.6% at the end of 2014 & at the beginning of 2015 it might be up to 5%. Most of the economists assumed that mortgage rates would rise in this year due to good economical improvement & the Federal bond-buying program. But it did not happened. Economists are have a prediction that in 2015 domestic economy will improve.
2.The increasing wave of Millennials will boost demand: Since last decade a major portion of the U.S population is consists of baby boomers. But astonishingly last year it is seen that millennials, who are aged between 24 to 22, has started families & looking to purchase their dream home. According to experts, these guys will cover up 2 out of three people in the population in next 5 years. 2015 will be the milestone of millennial generation in U.S housing market.
3.Property prices: At the end of 2014, it is expected that home appreciation will be reduced to 4.5% which was 9.3% in previous year.In 2015 the home appreciation may drop more 3%.
4.Home construction: Home construction will rise up in this 2015, assumed by economists that it will increase by 20% next year. Total home/property sale will be boost up by 5%-6% which might be the best sales figure in last eight years.
5.Mortgage originations: Single-family home mortgage originations may be reduced by 8% , it is a major drop of refinancing volume. In 2015, there will be nearly 23% origination which is half than 2014. Mortgage originations in multi-family homes will be raised by 60% from 2011 to 2014.
6. Young generation will demand housing in less affordable places: Home construction for Single-family is subdued. The reason behind this situation will be increasing demand of the Millennial generation who prefers to stay & live in housing which is much expensive and also hard to construct.Specially, young people tend to live in huge expensive cities like New York, Austin, and Honolulu where standard of living is quite high.
7.Home price will fall, but so as affordability: In 2014, The housing recovery has slowed down than last year. Home prices has a rise in oct 2014 by 6.4%. But last year it was 10.6%. It is because the reaction of bursting the housing bubble has its immense affect on the housing market. Most of the homeowner will be looking to sell their house in 2015. It will put more pressure on the home prices, making it downwards. Due to the factors like “Millennial mismatch” and continuous growing mortgage rates , the middle class people will not be able to afford the house in 2015.
These are some initial prediction from different experts of this industry. Soon , we will know how much of these are going to be true and what effect it will get upon housing industry.