As we close the door on 2014 and prepare for a fresh start in the New Year, it’s fun to look ahead and predict what the next 12 months will have in store. Many trends are set and announced in the fall (New York Fashion Week, Pantone Color of the Year, etc.), and real estate is no exception.
While we were obsessing over Marc Jacobs’ spring collection, real estate experts were busy analyzing data and putting together their predictions for the twists and turns we can expect for 2015. Here are a few of the most prominent real estate trends to keep an eye on in the coming year.
1. Home values will rise, but at a slower pace than in 2014
Home prices surged 5.6 percent nationwide in 2014, but analysts agree that the growth will slow considerably in 2015. In fact, the chief economist for Zillow.com, Stan Humphries, predicts that home price growth will slow to as little as 3 percent in the New Year. This move will shift negotiating power away from sellers and back to buyers, creating a more balanced market.
2. Millennials will enter the housing market
A less-than-stellar job market and heaps of student loan debt have kept many millennials out of the home buying game over the last several years. However, economists predict that this trend is about to reverse completely. “By the end of 2015,” Humphries says, “millennial buyers will represent the largest group of homebuyers, taking over from Generation X.”
3. Mortgage rates will hover below 5 percent
Those who have a New Year’s resolution to buy a home might want to take the leap sooner rather than later. Mortgage giant Freddie Mac’s long-term outlook for 2015 shows interest rates consistently rising over the next 12 months. The upward trend is expected to push mortgage rates up to or even above 5 percent by the end of next year.
4. It will be easier to qualify for home loans
The housing market crash resulted in a spike in foreclosure activity, which left many folks with damaged credit and dampened spirits. With these financial issues finally aging out of their credit reports, those affected will have another shot at homeownership in 2015. On top of this, Fannie Mae and Freddie Mac recently announced the return of the 3 percent down payment. These programs will make it easier for first-time and low- to moderate-income homebuyers to obtain a mortgage.