In a previous blogpost we’ve been predicting what’s likely to happen to house prices and how long it will take to sell a house. In today’s post we will look at some trends that are likely to impact the real estate market in the US, throughout 2015.
Millennials are entering the housing market
Millennials is a word used to describe people that have reached an adult age around the beginning of this millennium. This group of people is now starting to enter the market for houses. Because this group is so large, the demand for houses will go up significantly. It’s expected that the group of millennials will be good for about 65% of all real estate transactions, in the coming years.
The average millennial has a demand for expensive real estate in popular areas. Because it’s hard to build new real estate in such places, it could be a problem to bring enough supply to this new group entering the real estate market.
Mortgage rates will go up
The mortgage rates are still very low, considering the rise in real estate prices and the recovering economy. Now would be a good time to lock a good mortgage deal because the rates have rarely been lower than now. Several economists have predicted a rise in mortgage rates before the end of the year. Mortgage rates usually go up in an upwards economy, so this wouldn’t be a big surprise.
A rising mortgage rate will have a big impact on the low and middle incomes. As their income would just be enough to be able to finance a house in today’s situation, higher mortgage rates could make it impossible for them to buy a house in the future.
Real estate prices are more stable
Real estate values are more stable this year than they have been in the recent past, in the aftermath of the financial crisis. House prices don’t seem to be determined by sentiments anymore but more by the laws of supply and demand. This makes real estate a good investment again and confidence in the market is likely to keep rising.
Although the signs for the real estate market are good, it’s good to remember that this market is cyclical. When optimism is gaining momentum and building projects are outpacing demand, there is always the risk of a new real estate bubble.