The discussion is beginning about the 2015 real estate market. Lawrence Yun, chief economist for the National Association of REALTORS and Mel Watt, director at the Federal Housing Finance Agency, both spoke recently at the 2014 REALTORS Conference and Expo in New Orleans. Both men believe there are a few hurdles to overcome in 2015, but that there is hope for a steady, growing housing market, with existing home sales and home prices forecast to rise.
My Yun cited the improving job market, increased consumer and builder confidence, and attractive interest rates as very good news for the housing market. He also noted that increased inventory and slower price gains (in most markets) combined with pent-up demand have helped existing home sales with stronger growth. He anticipated this demand to continue through 2015.
The biggest challenge we face, according to Me. Watt, is availability of credit. He said, "We need to find a way back to responsible lending to credit worthy borrowers across all market segments." His concern is that only those with pristine credit are able to obtain mortgages right now.
Mr. Yun's remarks touched upon the millennial market, which is of great interest to most REALTORS. This segment of the population, roughly those born between 1977 and 2000, has generally not stepped into the housing market. As a mobile generation, as well as one who saw their parents get burned in the housing bubble, they have not been eager to buy homes of their own. However, as they represent almost 25% of the U.S. population, their importance to the housing market cannot be denied. Student loans, difficulty entering the hob market during the recession and delayed marriage and parenting were all cited as reasons for their hesitation to buy. Mr. Yun did not express much confidence that 2015 would be the year millennials choose to enter the market in significant numbers.
Finally, Mr. Yun addressed the issue of renters versus homeowners. He pointed out that home owership is at a 20-year low and could fall even lower if we do not act to help many of these good renters transition into homeowners. He mentioned research out of Harvard Univeristy regarding the financial security achieved when a mortgage is paid off. He said, "Housing equity provides a cushion for retired folks," as the research indicated that renters costs were greater than the housing costs of those who had paid off their mortgages.
Real estate is complex, but I like to take the mystery out of it for my clients! The beginning of a new year is always a popular time to evaluate your living situation. It would be my pleasure to work with you to purchase a new home, or to sell a property which has served you well but no longer meets your needs.