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Sunday, 4 January 2015

Home buyers First-time return on Housing market 2015

When it comes to the housing market, 2015 may be the year first-time home buyers make a return. With rent rising quicker than incomes, many Millennials are probable to start looking to buy homes of their own.

What they will discover are much more good conditions than they have seen in years, plus lower down payment mortgages, looser lending values and a bigger selection of home to choose from. Here are 4 housing market trends economists and other industry experts expect to see in the year ahead.

1. Looser lend values

Obviously missing from the housing market over the past 5 years have been first-time home buyers.
But in early on December, Fannie Mae and Freddie Mac put latest lending rule in place and started offering 3percent down payment mortgages that will make it easier for more first-time buyers to qualify for a mortgage. Add to that an increase job market, and forecast look much brighter for youthful home buyers.

According to the Mortgage Bankers Association, sales of latest homes are expected to climb by more than 13percent in 2015, while existing home sales are expected to increase by 5percent.
A point in the number of first-time home buyers should spark a chain response by enabling existing homeowners to sell their homes and buy more expensive ones, said Zandi.

2. There will be more homes to choose

Builders are ramping up construction of smaller homes to house these new entry-level buyers, said Stan Humphries, chief economist.

Home builder D.R. Horton formed state Homes, to build no-frills homes ranging in price from $120,000 to $150,000, about half the average price of the homes it usually builds.

3. Home price will become more affordable

With so many new homes slated to come onto the market, the supply is expected to untie up and take some force off of home prices. That should get better affordability in some of the more out-of-reach metro area markets like Washington, D.C., San Jose and Seattle.

Plus, the Nobel-Prize winning economist and co-founder of the Case-Shiller home price index, home prices look somewhat luxurious. In fact, he thinks a decline in home price is a "distinct option. Jed Kolko expects increased, but only in low single-digit percentages because there will be fewer big institutional investor buying up property and propping up prices.

4. Mortgage rates will move higher

If there is any single market trend that Real Estate Industry has gotten consistently wrong lately, it's the way of mortgage rates. But most do wait for rates to rise at some point in 2015. In December, the Federal Reserve signals that it would not raise the Federal Funds rate until the summer of 2015 later.

A mortgage information provider expects mortgage rates to peak next year at about 4.75percent for a 30-year fixed rate mortgage. He doesn't see rates rising much beyond 5percent, which would still be “very good rate, in history”.

Khater does not even be expecting rates to go that high. He predicts rates to top out at 4.5percent, which should do little to have an effect on buyers. A raise to 4.5percent from the present 4percent adds about $60 a month to mortgage payments on a loan with a main balance of $200,000.