Most housing analysts are predicting substantial growth in housing activity in 2015 — much more than has been experienced during the past year. The Daily Journal tells MHProNews that the “2015 Economic Outlook” issued by the Wells Fargo Economics Group is subtitled “A whole new ball game.” This report predicts that the housing market will continue its recovery and gain momentum in 2015 after a disappointing 2014.
Wells Fargo cites a number of reasons in the report for its optimistic housing market predictions for next year: namely easing of credit, job and income growth, and mortgage rates nearing their lowest levels in a generation.
The economists predict existing home sales, which dropped by 3.8 % for the first 10 months of 2014, will grow by 4.1 % in 2015.
Single-family starts grew by only 6 % in 2014 because of a weak job market, slow household formation, tight lending standards and a backlog of troubled mortgages going through the foreclosure process. However, these starts are expected to make a comeback in 2015. Economists expect that the percentage of single-family starts will more than double, up to 13.7 %.
Two major factors in the turnaround in homeownership have been the former rise in foreclosures and the earlier decline in home prices, according to Wells Fargo. The homeownership rate, which peaked 10 years ago, has fallen down to 64.4 %, the lowest rate for homeownership in 19 years.
“We would expect this series to overcorrect because of tight mortgage credit, changing attitudes towards homeownership and household finances that continue to be repaired,” the report says.
In addition, encouraging words come from the National Association of Home Builders. U.S. News & World Report tells MHProNews that Robert D. Dietz, an economist for NAHB, says “The signs suggest 2015 will be positive for housing, which in turn will generate benefits for the overall economy.” He predicts that single-family construction will grow in 2015 because of housing demand among prospective first-time home buyers.
David Payne, writing in the Kiplinger Letter, also predicts a stronger housing market in 2015. He says, “It’s the gradual easing of credit conditions that will break the leftover 2014 sales logjam. This easing will come from changes made by Fannie Mae and Freddie Mac.”
He continues by saying that first, down payments for Fannie and Freddie qualifying mortgages have been reduced from 5% to 3% for creditworthy first-time home buyers. “This by itself will not open the floodgates, as most buyers in this category could have obtained a loan through the Federal Housing Administration (FHA). What is important is that the change signals mortgage lenders that Fannie and Freddie rules are beginning to relax, so lenders can consider making loans to folks that previously would have been ruled out automatically.” He also believes that lenders can lower interest rates, since they have less risk on loans sold to Fannie and Freddie. ##
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Article Submitted by Sandra Lane to – Daily Business News- MHProNews.
