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How the 2014 Housing Market Will Shape 2015.
Here are some of the trends realtor.com® notes from 2014 that will help drive a stronger 2015:
An improving economy: “After an especially harsh winter earlier in the year, the economy picked up steam and produced a banner year for new jobs,” realtor.com® notes in its report. “The GDP this year was higher, and is still trending higher, resulting in stronger consumer confidence.”
Low mortgage rates: Despite the end of the Federal Reserve’s quantitative easing this year, mortgage rates continued to decline and helped to lower borrowing costs of home buyers. In recent weeks, the 30-year fixed-rate mortgage has been below 4 percent.
Returns to normal price appreciation: “After two years of abnormally high levels of home price appreciation in 2012 and 2013, price increases moderated throughout 2014,” realtor.com® notes. “We are now experiencing increases in home prices consistent with long-term historical performance.”
Distressed sales decline: Foreclosures and short sales fell throughout the year. Foreclosures are projected to be down 30 percent year-over-year at the close of 2014.
Investor activity lessens: Coinciding with the drop in distressed sales and higher home prices, large-scale investor purchase activity in the single-family market decreased. Less competition from investors may offer more room for traditional first-time buyers to squeeze into the market.
However, the realtor.com® report notes several factors that continue to plague the housing recovery and prevent it from being stronger, including:
Tight credit standards: “Despite historically low rates, many households were prevented from capitalizing on mortgage access because of overlays lenders added to qualification standards in order to limit put-back risk,” realtor.com® notes. “A tight spread between approved and declined FICO scores shut out nearly half of the potential population this year. As a result, mortgage credit availability did not improve in 2014.”
Tight inventories of for-sale homes: Inventories did rise this year, but supply failed to outpace demand. The monthly supply of new homes and existing homes continued to fall beneath normal levels, and the age of inventory was down year- over-year.
Fewer first-time buyers: The share of first-time buyers dropped to the lowest level in nearly 30 years, according to the National Association of REALTORS®. “But the first-time buyer share is showing signs of modest improvement by the year-end,” says Lawrence Yun, NAR’s chief economist. Federal policy actions, such as revised regulations for lenders and new low down-payment programs introduced in December, are believed to have a positive impact in increasing first-time home buyer share in 2015.
Record levels of renters: The home ownership rate continued to fall this year as the number of renters increased. Rent increases have become an inflationary concern this year, and the pace of rental increases does not appear to be slowing down.
Sluggish new-home building: Single-family new-home starts barely budged in 2014 compared to 2013. New home sales remain far from normal levels. They are typically near 16 percent and instead remain around 9 percent. Still, new home prices rose substantially again this year, revealing that higher priced product is limiting the demand.
(Source: REALTOR MAGAZINE)
More Minnesotans are fixing up their homes to reduce the level of cancer-causing radon gas, partly because of a year-old state law governing real estate sales.
The Minnesota Radon Awareness Act, which took effect last January, requires home sellers to notify buyers if the home has been tested for radon, provide the results of that test and disclose if any work has been done to fix problems. Sellers are also required to provide a “warning statement” and written information about radon to buyers.
The number of homes getting radon mitigation work has averaged 1,279 annually in recent years, according to the Minnesota Department of Health. But in the first nine months of 2014, that number had already nearly doubled, to 2,389.
“We encourage every homeowner to test their home and fix it,” Tranter said. “Because if they don’t now, they may have to during the home sale — and they can also receive the benefits of reduced radon exposures.”
Radon testing takes a few days, and homeowners can get test kits from city and county health departments, hardware stores or radon testing labs. Mitigation work typically involves installing a pipe beneath the home that helps vent dangerous gases out of the home.
CLICK HERE TO READ: http://www.startribune.com/lifestyle/homegarden/287166161.html
National Association of Realtors (NAR) estimates that 2014 sales will end up below 2013 levels. The trade group forecasts that 4.94 million existing homes will be sold this year, down 3 percent from 5.09 million in 2013. Analysts say sales of roughly 5.5 million existing homes are common in a healthy real estate market.
Hopes are higher for the new year. In 2015, the group expects sales of existing homes to jump to 5.3 million.
The U.S. economy has generated 2.65 million new jobs so far this year, and the unemployment rate has dropped to 5.8 percent from 6.7 percent at the start of 2014. Buying could also be helped by average 30-year mortgage rates staying close to a 19-month low. Rates nationwide averaged 3.87 percent this week, according to the mortgage company Freddie Mac.
CLICK HERE TO READ: http://www.startribune.com/lifestyle/homegarden/287206911.html
The Twin Cities have an abundance of well-regarded colleges and universities, but it’s broadly believed that economics are driving the trend. The region has one of the lowest unemployment rates in the nation and a modest cost of living compared with many cities on the coasts.
Because of a combination of relatively inexpensive house prices, high wages and low property taxes, the Twin Cities were recently singled out by the Atlantic magazine as the second-most-affordable place in the nation for millennials.
In the 25 counties, including Hennepin, with the biggest increase in millennial population between 2007 and 2013, fair market rents a property in 2015 will require 30% of the median household income. Buying a median-priced home in the county requires 36% of median household income.
“First-time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market,” said Daren Blomquist, vice president at RealtyTrac.
CLICK HERE TO READ ARTCLE: http://www.startribune.com/local/287064231.html
Minneapolis: Favorite for Millennial Home Owner Growth and Growth in New Construction
A diverse economy and strong housing affordability lands Minneapolis on our list. The Twin Cities area continues to show low unemployment and is setting new records for jobs in 2014.
The combination of the booming job market and affordable housing makes the city of lakes a hot spot for millennials.
In fact, it’s the second-largest market in the nation among home-owning millennials. The Minneapolis area is also seeing strong growth in new construction, which helps provide supply to meet the increased demand.