The past year was filled with record-low interest rates, steadily rising home prices and loosening mortgage-lending standard, making it one of the strongest years in the housing industry since the financial crisis six years ago.
More cities are beginning to return to normal as bustling economies, job growth and new home construction continue their three-year uptick back to prerecession activities.
And now that the housing market is diving into 2015, there is a new slate of predictions from rising home prices to the decline of the baby boomer homebuyer.
Here are four predictions for the 2015 housing market that we expect, here at Guardian Mortgage:
1. Home prices rise while foreclosures decline
National home prices averages increased over 11% over the course of past year according to statistics provided by the National Association of Realtors. Most industry insiders expect this increasing trend to continue into the coming year and are predicting an additional rise of about 5% more in 2015.
As housing prices have increased, foreclosure rates have fallen. As of October 2014, the national foreclosure rate reached its 32-month of consistent declining. 2015 is expected to be the year where foreclosure rates will return to normal, prerecession levels once again.
2. Inventory could impact home sales prices in 2015
As housing prices and foreclosure rates return to more normal activity across the country, the topic of housing inventory will begin pushing to the forefront of conversation and trends that economists will begin paying close attention to in 2015.
It is expected that over the course of the coming year, the inventory shortages of 2013 and 2014 will come to an end, opening the gates for competition and lower home sales prices to take center stage.
3. Home refinancing will slow and boomers won’t buy
The historic low interest rates of the past four years have created a booming home refinance market; however, this trend is expected to slow down greatly in the coming year. According to the Mortgage Bankers Association, less than a quarter of existing mortgage holders now have a high enough interest rate to make home refinancing worthwhile.
Along with a slowdown in refinancing, it is expected that Baby Boomers will continue to buck the trends of generations past and will opt to stay in their larger single-family homes instead of transitioning into smaller options. Until housing prices officially return to normal, prerecession levels, most Baby Boomers feel that it makes more financial sense to stay in their current homes and to continue to accrue equity instead of selling.
4. Changes in credit market and mortgage sign-offs expected
Despite talk about lowering FICO scores to make it easier for some buyers to qualify for loans, most industry experts say that stricter mortgage regulations are creating a very tight credit market, which isn’t likely to change anytime soon. Many buyers also are carrying a large load of non-mortgage related debt that is affecting their ability to qualify for a mortgage.
The Consumer Financial Protection Bureau will be finalizing and implementing new closing requirements effective August 2015. The new Truth in Lending requirements are expected to make the sign-off process more transparent for buyers and streamline the paperwork process as an electronic solution, or eClosing, option becomes available.
All-in-all, 2015 is expected to be a banner year for the housing industry and one that will mark the official return of the market and create a feeling of stability with both the industry and consumers.
The great news is this hasn’t been felt for more than six years.
It's about time.