Freddie Mac Suggests 2015 Could be a Great Year

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Filed under: Freddie Mac, Market Comentary

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According to Freddie Mac, 2015 could be the best year for home sales and new home construction since 2007, which is great news for all involved in the mortgage industry.

Deputy Chief Economist Len Kiefer recently said, “This month kicks off the spring home buying season. Between now and the end of June, we’ll see about 40% of all home sales for the year. So these next few months will essentially tell us whether or not 2015 will be a good or bad year for housing markets.”

Freddie Mac’s forecast in its Economic and Housing Outlook gave specific reasons to be optimistic.

• Approximately 80% of metro markets in the United States continue to be affordable. This is based on the data collected through the fourth quarter of 2014.
• Payment-to-income and price-to-rent ratios indicated that most markets have home values that are sustainable.
• Interest rates were down in January 0.75% from a year earlier and still remain low on a year-over-year basis.
• Over the past twelve months ending in February, 2015, the economy added nearly 3.3 million jobs, the fastest pace since 2000.
• There is an expectation that wages and incomes will rise.
• An important demographic, the Millennials, those between 25-34 years of age, have begun to see their job prospects improve. The employment-to-population ratio for Millennials has increased to 76.8%, which is the highest level since 2008.
• Having better job prospects for Millennials will actually drive household formation and housing demand.
• There has been a housing demand in rental markets, which show the lowest vacancy levels since 2000.
• Rising demand and improving job prospects for younger households mean rents will probably rise at or above the rate of inflation this year.

Kiefer added that many current renters, “may decide to strike while the iron is hot (mortgage rates are low and home prices not too high) and purchase a home this year. In fact, study findings indicate that many feel it could make financial sense to buy today.”

If you have any questions about anything associated with the mortgage industry, please feel free to give me a call and we can discuss what is on your mind.

Source:  http://www.mortgagenewsdaily.com/03122015_freddie_mac_outlook.asp

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