2015 Proxio Global
Real Estate Outlook
Interest rates are almost certain to rise in 2015.
What will drive interest rates higher? The Fed is signaling that the third round of quantitative easing is coming to a close and that a short-term fund rate hike is inevitable.
- Chief Economist for N.A.R., Mr. Lawrence Yun believes interest rates for 30-year fixed mortgages will increase to 5%, possibly as early as the spring. He also thinks interest rates will rise another 1% by the end of 2016 to a 6% level.
- Both Freddie Mac and the Mortgage Banker’s Association forecast the 30-year fixed rate to reach 5% by the end of 2015.
- Dr. Bill Conerly, a well-known economist, sees interest rates climbing even further, to perhaps as much as 6% by the end of 2015.
U.S. Home prices level off as more inventory hits the market.
Price gains are expected to moderate in 2015 as more inventory hits the market. This should create a more normalized environment between buyers and sellers. With the buying frenzy fading, most forecasts call for a 4 to 6% gain in home prices in 2015.
Residential resale units are expected to increase by 7%, but new development sales are expected to increase by 30%.
The resale market will continue to plug along, but new development sales are expected to be very strong in 2015. There is a pent-up demand for new housing, following the precipitous decline of new construction during the housing recession. Builders are coming back strong, but the McMansion style of new homes built in the late 1990’s and early 2000’s are a thing of the past. Today’s modern developments are often smaller, located along coastal regions, and are going high-rise.
U.S. Foreclosures will drop to pre-recession levels.
The market has absorbed most of the distressed housing, and 2015 should bring back more normal market conditions. The REO market, which has been in decline for a couple of years, will continue to dry up and most of the foreclosures will be for reasons that are more personally driven, instead of caused by loans and market speculation.
Dollar reaches 10-year high vs. several major world currencies.
The dollar’s strength creates an opportunity to help clients buy in a foreign country. This is an ideal time for your clients who are considering buying in Europe; perhaps a vacation or retirement home or an investment property. Another good opportunity: Mexico is a rising economy with many good investment opportunities and beautiful condos along its beaches. Connect to agents in your target country through ProxioPro and generate some referral income.
Foreign purchases in the US will continue to be strong as deflation hits Europe and money continues to flow out of politically challenged areas.
The year 2014 showed an all-time high in US real estate purchases by international buyers. With continued geo-political instability in Latin America and Eastern Europe, and Western European economies struggling, foreign investors will continue to seek refuge in American real estate. U.S. real estate is considered safe and stable, with price appreciation almost a certainty over the long haul.
Multicultural and multi-generational families continue to grow.
The stringent lending standards and aging of the baby boomer generation is creating new challenges to housing at the bottom and top of the market. With many recent young professionals not being able to qualify for mortgages, and an aging American demographic, multicultural buyers and multi-generational housing are becoming much more important segments of the housing market.