Real Estate
Housing 2015-The return of the first-time home buyers
Will 2015 be the year first-time home buyers come roaring back to the housing market? You tell me...
Here are four housing market trends economists and other industry experts expect to see in the year ahead.
1. Looser lending standards
Conspicuously absent from the housing market over the past five years have been first-time home buyers. But in early December, Fannie Mae and Freddie Mac put new lending guidelines in place and started offering 3% down payment mortgages that will make it easier for more first-time buyers to qualify for a mortgage. Add to that a strengthening job market, and prospects look much brighter for young home buyers.
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“It’s already begun that Millennials are going back into the market,” said Mark Zandi, chief economist for Moody’s Analytics. According to the Mortgage Bankers Association, sales of new homes are expected to climb by more than 13% in 2015, while existing home sales are expected to increase by 5%. A spike in the number of first-time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones.
2. There will be more homes to choose from
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Builders are ramping up production of smaller homes to accommodate these new entry-level buyers, said Stan Humphries, chief economist for Zillow. Homebuilder D.R. Horton formed Express Homes, to build no-frills homes ranging in price from $120,000 to $150,000, about half the average price of the homes it normally builds. Other builders, like LGI Homes and KB Homes are also targeting first-time buyers.
3. Home prices will become more affordable
With so many new homes slated to come onto the market, the supply is expected to loosen up and take some pressure off of home prices. That should improve affordability in some of the more out-of-reach metro area markets.
4. Mortgage rates will move higher -- at some point
If there’s any single market trend that real estate industry pros have gotten consistently wrong lately, it’s the direction of mortgage rates. But most do expect rates to rise at some point in 2015.
As always, if you are in the market and would like help either getting pre-approved for a mortgage or would like help finding a home, please give me a call at 630 981-1629 or email me at 3cornersre@gmail.com
Russ Wiora
Charles Rutenberg Realty
