As experts from industries across the board make predictions about how their industries will fare in the coming year, real estate experts are predicting that 2015 will be the year of the first-time homebuyer.
Increasing rent rates, combined with steady incomes, may very well start a new trend among millennials. Experts say that in the new year, many people in this generation will likely decide to purchase a home instead of renting, thanks to favorable market conditions. Lenders are becoming more lenient and first-time homebuyers are enjoying a wider variety of housing options than before.
According to CNN Money, real estate experts and economists see four main trends in the coming year, including more attainable mortgages, more home options, more affordable homes and increasing mortgage rates.
While many first-time homebuyers have steered clear of the housing market in the last few years, looser lending habits in the new year will allow them to re-enter. Thanks to recent changes in lending guidelines from Fannie Mae and Freddie Mac, 3% down mortgages are now available to first-time homebuyers, making it easier for them to secure a mortgage.
The Mortgage Bankers Association expects new home sales to grow to 13% and existing home sales to increase by 5% in 2015, according to CNN Money.
Not only will young home shoppers be better able to secure a mortgage in the coming year, but they will also have more home options to choose from. In order to meet the needs of these new homebuyers, builders are constructing new, smaller homes that will be more affordable for young shoppers just entering the market.
While prices on these new homes will be lower than normal, experts seem to disagree about the overall trend in home prices in 2015. Some argue that the influx of new homes will ease prices on existing homes, while others see small increases in the near future.
“Interest rates have continued to stay low and even dropping a little making it a prime opportunity to buy,” says Russ Wald of Russ Wald Realty. “There will be some people hitting the buyers market as their short sales and foreclosures will be coming off their credit record making them a buyer once again. Rents will continue to rise once again as there are many with credit issues and still can not buy.”
Although industry experts haven’t been spot on lately about the direction of mortgage prices, most seem to agree that 2015 will be the year that we finally see an increase, even if it is a small one. Keith Gumbinger of the mortgage information site HSH.com expects to see rates increase to 4.75% for a 30-year fixed mortgage at some point throughout the year, according to CNN Money, while others say they may not even go that high.