The 2015 real estate forecast has been a hot topic for the last couple months, with many experts weighing in with their opinions and predictions. While some have different ideas of what the year will bring compared to others, there are a few predictions that remain consistent. Read on for what to expect in the coming months.

Existing home sales will increase

As more buyers enter the market, current home sales will grow due to the belief that rates and prices are on the rise. While similar to the market trends of 2012, the properties sold will not include so many distressed sales.  Experts believe that baby boomers will drive the majority of housing activity as they prepare for retirement. There is also a belief that 65% of the first time home buyers this year will consist of millennials.

Millennials will be at the forefront of home buyers

2015 will continue the trend of the population and households growing at a slightly higher pace just as it did in 2014. Due to the addition of 2.75 million jobs along with economic gains, Millennial headed households are expected to see significant growth.

Home prices will gain roughly 5%

Experts are suggesting that the combination of favorable employment conditions and low inventory levels will give home prices a push next year. As it is difficult to get into high priced markets, such as San Francisco, first time home buyer activity is expected to be concentrated in areas with lower priced housing and strong employment opportunities.
Mortgage rates will end the year at 5%:

While still historically low, rate increases will affect housing affordability. First time home buyers trying to get into the market might be pushed to look in less expensive locations. As the Federal Reserve increases the target rate, mortgage rates will increase in mid 2015 meaning 30 year fixed rate mortgages will reach 5 percent by the end of the year. Meanwhile, 1 year adjustable rate mortgages will rise minimally and influence buyer interest in hybrid and adjustable mortgages.
Home affordability will decrease by 5-10%

Considering the historical norms, housing affordability will still remain strong even though it is expected to decline by 5-10% due to increasing mortgage rates and appreciation in home price. The good news is that the decrease will be offset thanks to increased incomes.

If you are interested in buying or selling in the Tahoe Keys and are looking for more real estate information, call Peter Delilli at 530-308-4331.