The entire country has reason to be optimistic about the housing forecast for the coming year. 
In a recent seminar, including Realtor.com Economist Jonathan Smoke, all were on the same page with a view of a strong recovery beginning. With 2.75 million new jobs created last year (up 8% from 2013) it is the best year since 1999. The experts are also seeing the Milennials (ages 25-34) coming of age and coming into the market in record numbers. Here are their top 5 predictions.
You will see that NOW is the most affordable time to buy. We are looking forward to several years of increasing prices and interest rates and thus decreasing affordability for Buyers.
RETURN OF THE FIRST TIME BUYER- The new job creation benefits this group more than others. While college graduates were stressed to find jobs in the past and moving back home with parents, this trend is reversing. There are more milennials finding jobs (up 16%), getting married and starting families than in the past decade. This age group is 80 million strong and their #1 financial goal is home ownership.
EXISTING HOME SALES WILL INCREASE ABOUT 8%- This number should exceed 5 million sales of existing homes. It will include about 400,000 more homes sold this year over last year due to the improving economy and the milennial effect.
PRICES WILL INCREASE AN AVERAGE OF 5%- There is currently a tight supply of homes on the market and with the increased demand, the experts predict that this is a conservative number. Traditionally, price increases have outpaced the rate of inflation by about 2+%. Factors such as the % of millennials in a population, household formation, the current affordability, and the recovery of lost jobs will cause the fluctuation between markets. The HOTEST markets are predicted to be Denver (14%), Atlanta (11%), Dallas, DeMoines, Houston, Phoenix, San Jose and Washington DC. For the first time in recent years NO markets should see a decline in prices.
INTEREST RATES WILL RISE TO 5%– Everyone is expecting a SLIGHT increase in rates and those of use that bought when rates were 12-18% can’t figure out why people are worried about this slight shift. However, it does increase the payment and therefore decreases affordability. With oil prices down and a strengthening economy this is inevitable.
AFFORDABILITY WILL FALL 5-10%- This is a metric tracked by the National Association of Realtors and is a relationship of median price, median household income and interest rate. With BOTH interest rates and median pricing predicted to increase the % of household income spent on housing will increase.
If you know of anyone THINKING of buying next year please have them call Linda or Kevin McCaffrey for a free/ complimentary pre buying counseling session.