What Will the New Year Bring?
With 2014 coming to a close, industry experts are looking to the New Year and making their predictions on what the nation’s real estate market will hold.
For starters, most are expecting interest rates to rise. While buyers benefitted from a banner year for mortgage rates in 2014, most economists agree that rates will begin to climb, primarily due to a rebounding economy and lack of stimulus from the Federal Reserve.
Millennials will begin to affect the market – in an even bigger way. While Baby Boomers have been holding fast to their homes and Gen Xers have been riding the economic roller coaster as best they can, millennials have been waiting, growing in the wings. Adults born between 1981-1996 make up the one of the largest portions of the nation’s population and will soon represent the largest group of U.S. homebuyers. Jonathan Smoke, chief economist of Realtor.com estimates that this generation will “drive two-thirds of household formations over the next five years,” beginning with more affordable regions.
The broad picture, in short, is that the market will continue to strengthen with home values and pricing continuing to improve, albeit at a slower rate. Many markets have already reached pre-bubble prices. The slower rate of improvement will create a more balanced market, giving buyers more of an edge. Which is probably good news for the millennials.