Experts agree that 2015 should be the year the housing market stabilizes. Of course, this statement comes with its upsides and downsides. For one, improved hiring, especially for Millennials, is said to be bringing more first-time buyers, while lending standards have become less strict, essentially broadening eligibility. By contrast, prices, especially compared to the growth seen in 2012 through 2013, are predicted to remain moderately stagnant, without significant growth during the year.
In the big picture, however, this year has set the stage to be a buyer’s market. So, what are the signs?
According to a Zillow survey, 54 percent of young adults currently renting plan to purchase a home over the next two years. As a result, Millennials are on the cusp of becoming the largest present group of homebuyers. In response, too, the market will see more first-time buyers shopping around.
That’s not to say other generations won’t have a presence. In fact, downsizing has become a trend for Baby Boomers, who appear to be seeking to purchase smaller, more manageable dwellings.
The subprime lending of the ‘00s has long passed, but what followed – 20-percent down payments and credit scores in the 700s, just to quality for a 30-year fixed-rate mortgage – is now loosening up a bit.
Instead, buyers have more options for lower down payments; in fact, certain programs require just three-percent for some first-time buyers.
As well, too, buyers with credit scores under 700 aren’t being locked out. In the present, those in the 600s may qualify for an FHA loan.
Lower, Stagnant Prices and Sales
For Realtors®, who saw prices and sales climb over the past few years, such a trend might seem anticlimactic. For buyers, by contrast, more leverage and greater preferences within your price range mean you can get something close what you want.
Specifically, local markets, in general, have reached a standstill, with total sales of existing homes not exceeding 5 million and sales of new homes only growing 13 percent. And, while home prices in December 2014 were back up to 2008 levels, predicted growth for 2015 shouldn’t be any more than three percent.
Buyers, consequently, are finding the American Dream to be more accessible, but investors – making cash-only purchases over the last few years – don’t consider property as strong or reliable of an investment.
Unlike before the crash, however, interest rates have found a middling stability, too. Analysts believe that rates will reach five percent for a 30-year, fixed rate mortgage by the end of 2015.
Real estate might be a buyer’s market, but the crash and Recession’s effects are still being felt. To work around this, buyers set on purchasing property have become more strategic.
First off, less expensive regions, especially those close to job growth, have started to appear more attractive. Although it’s expected that more Millennials will move back into the city, those seeking stability are gravitating toward bedroom communities in feeder markets.
Two, multi-family homes and multigenerational homeownership now go hand in hand. Buyers wanting to stay close to relatives will purchase a multi-family property, share the mortgage, and then rent out the rest of the house for additional income.
Considering a new home in Connecticut? If you’re interested in the local market, contact our office to learn about all locations and homeownership options.