U.S. Investment Immigration focus on U.S. Real Estate: When it comes to the U.S. real estate market in 2015, first-time homebuyers may dominate the scene. With rising rents and growing incomes, many are expected to prioritize home purchases.
According to CNNMoney, these young people will find that the coming year will be the best time to buy a home compared to previous years, with lower down payments, relaxed lending standards, and more existing homes available for selection—it would be a pity to miss out.
Here are four major trends in the real estate market for the coming year as predicted by economists and other industry experts.
1. Relaxed Lending Standards
Over the past five years, first-time homebuyers have stayed away from the real estate market. However, in early December of this year, Fannie Mae and Freddie Mac proposed new lending standards and began offering 3% down payments, which will qualify more first-time buyers for mortgages. Coupled with an improving job market, this gives young people hope for homeownership.
The Mortgage Bankers Association expects new home sales to increase by over 13% and existing home sales to grow by 5% in 2015.
The influx of first-time homebuyers into the market will trigger a chain reaction, as many homeowners will sell their existing homes to purchase better ones.
2. More Options
Stan Humphries, Chief Economist at Zillow, stated that builders are now focusing on smaller homes to meet the needs of first-time buyers.
D.R. Horton, a construction company, is building no-frills homes priced between $120,000 and $150,000, which is only half the price of an average home. Other builders like LGI Homes and KB Homes are also targeting first-time buyers.
3. More Affordable Prices
As more new homes enter the market, the supply shortage will ease, which will help improve housing affordability in major metropolitan areas such as Washington, San Jose, California, and Seattle.
Additionally, Robert Shiller, creator of the S&P/Case-Shiller Home Price Index, Nobel laureate, and economist, believes there is a "distinct possibility" of falling home prices. Other economists also expect a slight decline in home prices.
However, some are bearish on the real estate market. Jed Kolko, an economist at Trulia, believes that as large institutional investors enter the market, they will drive up home prices.
4. Rising Mortgage Rates
Recently, real estate professionals have repeatedly erred in predicting mortgage rate trends. However, most expect rates to rise in 2015.
Mortgage information provider HSH.com expects mortgage rates to peak next year, with the 30-year fixed mortgage rate at approximately 4.75%, noting that this is still a "historically favorable rate."