Experts forecast what they see in the real estate market for the coming year Following the Federal Housing Tax Credit that drove many new buyers into the market in 2009 and 2010, first-time homebuyers have seemingly gone into hiding. Just 33 percent of buyers were first-time buyers in 2014 (the historical norm is around 40 percent). But, housing experts are anticipating first-time buyers to return to the market in the coming year, according to realtor.com’s 2015 Housing Forecast. “In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” Jonathan Smoke, chief economist for realtor.com, said in a statement. “If access to credit improves, we could see substantially larger numbers of young buyers in the market.”
Here, realtor.com’s Top 5 Housing predictions for 2015:
1. Millennials will drive household formations.
Households headed by millennials will grow significantly, reflecting economic gains. Over the next five years, millennials will drive two-thirds of household formations. In 2015, the addition of 2.75 million new jobs and increased household formation will drive first-time buyer purchases.
2. Existing home sales will increase 8 percent.
Experts anticipate year-over-year sales to be similar to 2012, but with more “normal” sales of properties and decreased levels of distressed sales. The majority of activity will be driven by baby boomers prepping for retirement and sales to mil- lennials, who will account for 65 percent of first-time buyer activity. 3. Home prices gain 4 percent to 5 percent
Low inventory levels and high employment driven demand will push up home prices in the next year.
4. Mortgage rates will end the year at 5 percent.
Mortgage rates will increase midyear, as the Fed increases its target rate by at least 50 basis points before the end of the year. While still historically low, rate increases will affect affordability for firsttime buyers.
5. Housing affordability will decrease 5 percent to 10 percent
Affordability will decline, based on home-price appreciation and increased mortgage-interest rates.
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