It’s a new year—and the outlook on the housing market is definitely brighter. After all, 2014 was the best year in the U.S. economic recovery since the recession of 2008-2009.
With an accelerating economic recovery fueling job and income growth, prospects are good for homeowners and would-be home buyers.
1. Mortgage Rates Will Head Back Up
The flip side of the improving economy is that (sigh) mortgage rates will inevitably head up again. We’ve had a great run, but the honeymoon is over, and it’s time to settle in for a relationship that balances job growth with higher-but-still-reasonable interest rates.
2. Millennials Will Set Up House
The millennial generation is beginning its ascent—and no, not all of these youngsters born between 1981 and 2000 are living with their parents as they struggle to pay off student loan debt. Sure, they’ve faced huge challenges in the job market, but employment is improving, and older millennials are planning ahead.
3. Builders Will Break New Ground
Although total housing starts (construction on new housing units) barely broke 1 million in 2014 and was driven by multifamily homes, Smoke noted the pace will pick up in 2015 and shift in focus.
4. Credit Will Continue to Be a Major Factor
Strict mortgage qualification standards are keeping many consumers, especially younger ones, from buying a home with a bank loan. This situation has remained about the same for the last four years, although it’s possible that various new federal housing policy initiatives might help loosen those standards in 2015.
5. We’ll Close Out the Foreclosure Crisis
It’s been seven years since the housing bubble burst and foreclosures skyrocketed, but in 2015 we’ll see the end of that era. Already this year has seen a major improvement in the composition of sales—that is, there are fewer foreclosures and short sales in the mix.