The U.S. housing market has been subjected to a number of ups and downs since the bubble burst. Once the market crashed, homeowners inevitably lost a significant amount of equity and traditional lending institutions began to evaluate their loan programs. Nearly a decade later, home values have returned to historically high levels and the housing market has finally gained some traction. Each change was the result of several indicators. However, while things appear to be heading in the right direction, there are several factors that will greatly influence the housing market in 2015:
While some may be tired of the interest rate debate, there is no question that rates will continue to be one of the most important factors influencing markets in 2015. The Bank of Canada just reduced rates again, hinting at the fact that we may continue to see low rates in the U.S. throughout 2015. Many will ignore the importance of buying and investing in real estate while rates are low. However, their loss will be the gain of those that seize upon the extension of the opportunity to act and scale. No other single factor is likely to have anywhere near the impact as the current rate opportunity. As rates flex up and down, expect spurts in activity.
While some real estate experts might see the current oil price noise as a manufactured distraction, expect it to result in a number of symptoms which could affect local markets. A new map from Trulia shows a clear pipeline of concentration of oil related jobs running along a north to south corridor. If companies are squeezed and begin letting staff go in mass, expect it to be witnessed most significantly here. Some of the towns in this corridor, like Houston and Dallas, were recently those that experienced the biggest booms in jobs, wages, and real estate. There may be some minor consumer changes in the market, as some bite on more suburban properties.
The news can be a wild card. New reports used to fill space, or biased industry generated content can influence markets. In fact; major agencies like Bloomberg were admittedly created specifically to influence and direct markets and investors. This can simply come in the form of companies distributing their own press releases and sponsored stories, or filler pieces on which cities could grow fastest. Due to how quickly this content can be syndicated and spun, it can certainly influence where individuals and some small firms look to buy real estate and invest. If they are fortunate, the speculation might pay off.
There will certainly be a lot of statistics published in 2015. Unfortunately, most individuals and even many of those in the real estate industry don’t have enough access or awareness of broader, deeper, raw data. Are the numbers normal for the season? Are they seasonally adjusted, or not? How do they compare to different measurements? Statistics can generally be massaged and filtered to argue any case at all. Look at recent Brooklyn stats. On the surface, you could say average rents rose about 3% year-over-year from December 2013 to December 2014. However, a line graph shows that rents rose to a high point, and peaked in the summer, and then effectively lost half of their gains in the last 6 months of the year. You could also point out that within Brooklyn, Williamsburg 2 bedroom apartments rose almost 6% just between November and December 2014. Yet studio apartments in neighboring Greenpoint plummeted almost 13% for the same period.
Green building features are now in high demand, if not expected in some areas. According to RIS Media, a new study has found that features like solar are truly adding a premium to home selling prices. If home buyers are willing to pay thousands more for greener homes, you can bet these homes also get more attention, and sell faster – if they are marketed well. There are many more green features which can be built into homes, communities, and real estate businesses.
Reduced Down Payment Demands
Down payment requirements have reportedly been one of the biggest factors holding back a full rebound. Mortgage lenders are more rapidly easing underwriters and are rolling out new loan programs with low down payments. This is on top of the 100% financing home loans already out there. A recent report from Realtor Mag reports that almost 90% of homes now qualify for down payment aid, and that as of last count, over 90% of down payment assistance programs had funds for the asking. If more took advantage of these programs, we could see a dramatic boost in home buying in 2015.
Access to Education
While perhaps underestimated; access to information and real estate education is dramatically improving. This means better educated investors and consumers. The result is smarter home decisions. Yet, it also means that buyers and investors are more confident. Those that support them have a lot to win in 2015.