As 2014 comes to a close, real estate agents, market researchers and economists are making predictions for the real estate market in the new year. Here are five real estate market predictions for 2015, according to Home Buying Institute:
1. Home values will continue to rise.
While home price trends tend to vary at the local level, national averages serve as a general indicator of where things are headed. For some time, they’ve been headed upward. According to the latest Case-Shiller report, prices nationwide rose about 5.6% over the last year. The S&P/Case-Shiller Home Prices Indices are regarded as the leading measures of U.S. residential real estate prices.
Moving forward, financial data firm CoreLogic released their latest “HPI Forecast”, which includes predictions for monthly home price-gains and annual pricing trends. According to the report, the economists and analysts at CoreLogic expect U.S. home prices to rise by 5.7% between July 2014 and July 2015.
2. Double-digit gains will be limited to California and the Southwest.
Ten or so cities in California, along with Reno and Las Vegas, Nevada, are predicted to experience double-digit price gains over the next 12 months or so. This is accompanied by data that has shown that luxury real estate sales are on the rise.
3. Mortgage rates will remain below 5% for most of 2015.
Freddie Mac, a corporation that buys and sells mortgage securities, conducts a weekly survey of mortgage rates being offered by lenders in the U.S. In addition, they make various forecasts related to the housing industry. Their long-term outlook suggests gradually rising rates over the next 12 months. Of course, this is only a prediction.
4. Foreclosures will continue to decline, as a percentage of total inventory.
Starting a couple years ago, foreclosure filings have begun to decline. This is considered a welcome sign of normalization within the real estate market and for the broader economy.
CoreLogic reported earlier this year that foreclosure inventory had declined for 31 months in a row. A reduction of distressed inventory helps to lift and sustain real estate values.
RealtyTrac, a company that monitors foreclosed home statistics, supported these findings with their own reports. They reported improvements on this particular front as well. According to vice-president Daren Blomquist, “We’re in the homestretch of getting through the foreclosure crisis. But we won’t cross the finish line, with filings back to pre-crisis level, until early 2015.”
All in all, it seems the market will continue through its process of post-crisis healing.
5. Mortgages Will Be Easier to Obtain.
In July, the Federal Reserved released reports from its latest “Senior Loan Officer Survey on Bank Lending Practices.” The report suggested that mortgage lenders are becoming less strict in their standards in several key areas. As the Federal Reserve put it, “The July survey results showed a continued easing of lending standards and terms for many types of loan categories amid a broad-based pickup in loan demand.”
Areas that have been “loosened” include credit scores and debt ratios. In sum, lenders are allowing lower credit scores and higher levels of debt. The trend is an industry-wide reaction to lower loan volume.