Monday, December 29, 2014

Real Estate Market Watch 2015

          

     The housing market has gained momentum throughout 2013 and 2014 and is continuing into the New Year according to Realtor.com®'s 2014 Housing Review, which suggests the boom is, "fueled by significant improvements in economic fundamentals, low mortgage rates, and compressed inventory". 

     That upswing is credited to a rise in jobs leading to an increase of the nation's Gross Domestic Product (GDP) coupled with low rates, both of which have bolstered consumers' motivation to buy a home.

     That's wonderful news, but unfortunately the following factors still may make it a bit difficult for those first-time home-buyers to close on their loans in a timely manner, if at all. Depending on your financial situation, the process could also be a breeze. But keep these two items in mind to mentally prepare yourself for the journey of home-buying.

1. Strict Lenders: lenders are increasingly more tight-handed when it comes to granting home loans these days. But in 2015 those standards are predicted to loosen a bit, particularly in the areas of credit scores and debt ratios.

2. Competition: there are a low number of homes out there to select form.

     Let's focus on the positive, buyers. The top five factors that will continue to work in your favor here. Keep in mind these are predictions, not assurances.

1. The economy is continually improving, contributing to buyer confidence in the single-family market.

2. Mortgage rates are low (below 5%) which again help first-time home buyers to get the best deal possible.

3. Price appreciation is getting back to normal (still rising, but more slowly) after 2012 and 2013 favored home sellers, inflating the value of their homes and lightening the pockets of many home-buyers.

4. Foreclosures and and short sales are decreasing; these are known as "distress sales" and are down about 30% around the beginning of January, 2015.

5. Investors are expected to slow down since distress sales are decreasing. This will result in less competition in the single-family market. 


     All of these items are great news for home buyers. That doesn't mean home buyers won't face their share of hurdles in the home-buying process. Strict credit standards, tight lending, low inventory, fewer first-time home buyers in the single-family market, historic numbers of renters by the droves, and the painfully slow process of building new homes are all factors that might weigh down the process in the coming year. 

    Here at The Claus Team, we like to show you the light at the end of the tunnel. So when we give you hypothetically "bad" news, we'll also give you the good. The bright side of these challenges is that the overall economy won't be negatively-impacted by careless lending and credit standards as it did in the early to mid-2000's, when consumers were placed in home loans disproportionate to their incomes. When lenders were loose (just one contributor among many other large-scale financial missteps), the national economy crashed. 

     One of the keys to preventing further consumer and national debt was forcing financial institutions and individuals to raise their lending standards. The challenges are a good thing when you take that bird's-eye perspective.

   This Calculated Risk chart shows the state of the housing market in 2015 according to some of the biggest financial, home-building, and real estate institutions in the United States.


    Looking to buy or sell a home in 2015? January is often a great month to start your search for the perfect home and the perfect Realtor. Call your friendly agents at the The Claus Team and we'll advise you on everything you need to know to get a head start on your buying or selling journey. (210) 566-6355

   





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