Outlook for 2015

Freddie Mac’s U.S. Economic and Housing Market Outlook for November projects that home sales will strengthen along with the economy next year.

Meanwhile, the U.S. economy is expected to support a 3% growth rate in 2015. This would be the second time in the last 10 years the economic growth rate reached 3% or more.

According to Frank Nothaft, chief economist of Freddie Mac, the government fiscal drag has converted to fiscal stimulus and the lower energy costs will “fuel” consumer spending and business investment. He also says that easing of credit requirements for business and real estate loans will contribute to commerce and development, enabling consumers to have more confidence, contributing to future economic growth. Further, this expected economic growth is expected to create more and better-paying jobs, enabling more household formations and housing activity.

Freddie Mac has issued the following predictions for next year:

Mortgage rates are expected to increase next year. The 30-year fixed-rate mortgage recently decreased below 4%. Freddie predicts that mortgage rates will average 4.6% and tick up to 5% by the end of 2015. National home prices will slow to 4.5% this year as compared to slightly over 9% last year. Price appreciation is projected to decrease to an average of 3% in 2015. The issue is continued price appreciation and increasing mortgage rates will hamper affordability of home buyers in most markets.

Housing starts are expected to increase in 2015 by 20%. These new homes are likely to help home sales rise by approximately 5% — the highest gain in home sales in the past eight years.

Mortgage refinancings are expected to slide an additional 8% next year. Refinancings are projected to account for 23% of all mortgages issued next year. This is down from being more than half of all single-family originations in recent years.

Multi-family homes are going to surge next year. Mortgages for these homes have increased approximately 60% between 2011 and 2014. These mortgages are expected to increase 14% next year.

Another predicted shift is large investors are moving away from many housing markets as distressed properties (short sales and foreclosures) are becoming scarce. The large investors are being replaced by mid-sized companies and individuals seeking to buy and rent single-family homes. Large investors are holding significant inventories of homes to renovate and rent. The carrying cost of homes requiring repair and renovation is reducing the profits of the large investor, creating opportunities for others to purchase and do the work.

As the end of the year approaches, serious buyers are looking for properties to benefit from the low fixed-rate mortgages. The 30-year fixed-rate mortgages averaged 3.99% with an average 0.5 point. The 15-year fixed-rate mortgage averaged 3.17% with an average 0.5 point.

The five-year hybrid adjustable-rate mortgages averaged 3.01% with an average 0.5 point. The one-year ARM’s averaged 2.44% with an average 0.4%.

Mary Ann Clark is a Realtor with Coldwell Banker at 189-191 Mason Street in Greenwich. Questions or comments may be emailed to [email protected].

By participating in the comments section of this site you are agreeing to our Privacy Policy and User Agreement

© Hersam Acorn. All rights reserved. The Greenwich Post, 10 Corbin Drive, Floor 3, Darien, CT 06820

Designed by WPSHOWER

Powered by WordPress