The Hopeful Return of First Time Home Buyers in 2015

2015 could be the year that the housing market sees first-time home buyers making a comeback. Rents are rising faster than incomes which makes buying a home a better option than just throwing away money to never be seen again.

First-time home buyers will see some of the best conditions in history, incredibly low down payment mortgages, looser lending standards, and a bigger selection of homes to choose from. Here are four market trends economists expect these first-time home buyers to see this year.

  1. Looser Lending Standards: First-time Home buyers haven’t made much of an appearance in the housing market in the past five years. However, last December Fannie and Freddie established some new lending guidelines to start offering 3% down payment mortgages. With 3% down this makes it much easier for first-time home buyers to afford a down payment. Adding that to a growing job market, this down payment is surely a good choice.

An economist for Moody Analytics Mark Zandi has predicted the sale of new homes by more than 13%, while existing homes are supposed to increase by 5%. He also believes that if the first-time home buyers can make enough of a wave in the market it will create a chain reaction allowing existing home owners to sell their homes and buy bigger ones.

  1. There will be more homes to choose from: Builders are building smaller houses to accommodate these beginning buyers. Most home builders are building homes in the price range of $120,000 to $150,000 which is about the right range for these novice home buyers.
  2. Home Prices will become more affordable: With all the new homes waiting to go on the market the supply is expected to loosen and home prices won’t feel so much pressure. This should improve the affordability in the more out of reach metro areas of the country like Washington D.C., San Jose, and Seattle.
  3. Mortgage rates will move higher, eventually: The only wrong trend real estate professionals have gotten consistently wrong, it would be the direction of the mortgage rates. They are expected to rise at some point in 2015. They are expected to peak at about 4.75% for a 30-year fixed rate mortgage.

We will all see how this year plays out, hopefully it will be a good year for the housing market since gas prices have lowered and it feels like we all got a raise.

Post a Comment