Predictions for 2015 Real Estate Market: Mixed, Muddy, Mysterious

A review of 15 articles written about what to expect for the 2015 housing market actually did turn up the words “mixed”, “muddy”, “a mystery”. That said, there have some fairly consistent predictions from a number of reliable sources. While the national scene is interesting and offers some important insights, everyone knows that the predictions that will impact you the most, are the one’s relevant to your local market. Sometime by the end of January, I expect to see projections coming from Michael Orr, Director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University and Phoenix area real estate savant. I’ll be writing about his visions when they’re hot off the press. In the meantime, we’ll have to settle for more general, national predictions about the 2015 real estate market from economists with Freddie Mac: top-housing-markets-to-watch-in-2014-from-realtor-com

  • Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year.
  • Home prices: By the time 2014 wraps up, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. “Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers,” according to Freddie economists. “Historically speaking, that’s moving from ‘very high’ levels of affordability to ‘high’ levels of affordability.”
  • Housing starts: Homebuilding is expected to ramp up in the new year, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.
  • Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.
  • Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.

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