LIME REALTY GROUP wants to include a more in depth look at some of the predictions for 2015. We’ve been reading a lot of different websites and checking sources for these top 5 predictions and we’re looking forward to sharing what we’ve found with you.
01. MILLENNIALS WILL DRIVE HOUSEHOLD FORMATIONS: Both population and households have grown at a slightly higher pace in 2014 and this trend will continue in 2015 with modest improvement over this years increases. Households headed by Millennials will see significant growth as a reflection of economic gains. Millennials will also drive two-thirds of household formations over the next five years. 2015’s addition of 2.75 million jobs and increased household formation will be the two key factors driving first time buyer sales.
02. EXISTING HOME SALES WILL INCREASE +8%: Existing home sales will grow as more buyers enter the market motivated by a clear belief that both rates and prices will continue to rise. The increase in home sales year-over-year will be similar to 2012, but this time the composition of properties sold will be more normal with minimal levels of distressed properties. While the majority of housing activity in 2015 will be driven by baby boomers preparing for retirement, millennials will account for 65 percent of first-time home buyer sales.
03. HOME PRICES WILL GAIN +4-5%: Low inventory levels and demand driven by improved employment opportunities will push home prices up next year. While first-time home buyers have many economic factors working in their favor, increasing home prices will make it more difficult to get into high priced markets such as San Francisco and San Jose, Cal. As a result, first-time home buyer activity is expected to concentrate in markets with strong employment and affordability.
04. MORTGAGE RATES WILL END THE YEAR AT 5%: This isn’t much of a surprise. Mortgage rates will increase in the middle of 2015 as the FED increases its target rate by at least 50 basis points before the end of the year. Thirty year fixed rate mortgages will reach 5% by the end of 2015. One year adjustable rate mortgages (ARMs) will rise minimally. Lower ARM interest rates will influence an uptick in buyer interest for adjustable and hybrid mortgages. While still at historic lows, rate increases will affect housing affordability for first-timers trying to break into the housing market and will be another factor pushing them to less expensive locales.
05. HOME AFFORDABILITY WILL DECREASE 5-10%: Affordability will decline in 2015 by 5-10%, based on home price appreciation and increasing mortgage interest rates. This decline will be somewhat offset by increasing incomes. When considering historical norms, housing affordability will continue to remain strong.
Well there you have it. Any questions or comments, please send them along and we’ll do our best to help answer any questions you may have. After all, Lime is continually looking out for our clients by staying current with market trends and looking to the future. You can’t go wrong with Lime behind you. Call today.