Real Estate & Mortgage Insights
Despite Slow Recovery, Experts Optimistic About 2015 Housing Market
Even though the U.S. housing market has limped along a path back to health over the past several years, analysts and experts find reasons to believe that things will be better this year. Here’s a look at how mortgage and housing market groups believe 2015 is shaping up.
National Association of Home Builders
Confidence amount home builders dropped slightly in March for the third straight month, according to the NAHB index. Blaming lending restrictions and limited supply of vacant lots, the NAHB still predicts that this spring will bring a needed pickup in new home building.
“We are expecting solid gains in the housing market this year,” said NAHB chief economist David Crowe, “buoyed by sustained job growth, low mortgage interest rates and pent-up demand.”
Real estate data tracking firm Trulia believes the “rebound effect” of the housing market has ended. The rebound effect refers to how home prices have tended to rebound strongly in areas where prices fell most dramatically during the housing crash. But now that effect seems to have “melted away,” according to Trulia chief economist Jed Kolko.
“This is big news. For much of the recovery, the rebound effect was more closely tied to local price gains than job growth was.” Kolko explains. “But today, things have reversed: Job growth is now much more important than the rebound effect. As home prices have increased and gotten close to long-term normal levels, and as investors and foreclosure sales have become a smaller part of housing activity, fundamental drivers of housing demand — like job growth—have taken over again.”
National Association of Realtors
In its January Realtors Confidence Index Survey, the NAR found that credit conditions are softening ever so slightly. More realtors were seeing buyers with less-than-perfect credit buying homes, with 4 percent of Realtors reporting home purchases with clients who had credit scores below 620. During the past two years, only 2 percent of agents had witnessed those type of sales. While a normal market would typically have 5 percent of Realtors reporting purchases with poor credit buyers, the improvement is significant.
Mortgage Bankers Association
The MBA saw a pickup in refinance requests in the first few weeks of 2015 as interest rates remained ultra-low. Even though most of that surge has disappeared, the MBA has still upped its forecast for refinance loans and home purchase mortgages this year.
“We estimate a total of $1.2 trillion in mortgage originations for 2015, compared to $1.12 trillion in 2014,” wrote Joel Kan in the MBA Forecast Commentary. “Purchase originations will drive the increase, increasing to $731 billion in 2015 from $638 billion in 2014. Refinances are expected to be to $491billion in 2015, an upward adjustment from $471 billion previously reported.”