According to Freddie Mac’s economists, 2015 could be the best year for new home construction and house sales in 8 years. There were 5.8 homes sold in 2007 and this year it’s estimated that 5.6 million more will find new buyers along with 1.8 million housing starts.
According to Deputy Chief Economist, Len Kiefer, March is the best month of the year for buying property and it seems it’s off to a good start. Overall though, the coming months are going to tell us more about how great this year is going to be for the real estate market, but so far everything looks positive.
Houses are a lot more affordable
One of the main factors that makes home buying more likely this year are the low property prices. In fact, around 80% of metro markets in the United States are considered affordable, according to data through the 4th quarter of ’14. The first factor that encourages people to buy property is the price which is 10% below the 2006 peak. Secondly, we have the interest rates which have dropped by 0.75 percent at the beginning of the year. However, the third and final factor that’s going to positively influence the real estate industry is household income coupled with affordability.
In the last 12 months that ended in February, the economy managed to add 3.3 million jobs which is the fastest growing pace since 15 years ago. Wages are also set to increase, which is part of the estimate that this year is going to be one of the best years for the property market in a long time.
Great demand
It’s just recently that people aged between twenty five and thirty four years old started seeing an improvement in their job prospects, and according to the recent data, 76.8 percent of this demographic is currently employed. With better job prospects for individuals in this age group, the demand for housing is only going to increase.
Credit availability
According to Freddie Mac, these potential home buyers won’t give up their desire of purchasing a house, because today credit availability is much wider compared to the past years. Thanks to a significant growth in the job market on top of the already affordable mortgage rates, creditworthy borrowers can now easily take out a home loan and purchase their first property.
The good news is that lenders are going to make it even easier for people to take out home loans, thanks to the new warranty framework and representation for Fannie Mae and Freddie Mac. Many people will therefore be able to finally enjoy greatly reduced FHA mortgage insurance premiums and enter the market with a federally insured loan. Even those who have little money for the down payment should not worry, since the new 3% initiatives from Fannie Mae and Freddie Mac will come to the rescue and allow them to purchase a new home with conventional financing. It’s a really great advantage that will especially be appreciated by those who’ve been planning on buying a house, but were forced to sit on the sidelines due to their lack of funds for the down payment.
