As the price of real estate always comes up and down, doing predictions about the price will be a bit difficult. Moreover, if you are an investor who would like to do property investment which is related closely with purchasing and mortgaging real estate activities, below predictions will help you as they are collected from property experts. Learn more about the predictions by reading the article below.
- The Demographic Wave of Millennial will Help Boost Prices
Knowing how many people in certain age and at certain place will make the predictions become easier. For example, the census Bureau announced that the cohort of now-23-year-old Americans is the largest in the country, followed by 24 and 22 year olds, respectively. This group of population will have a family and need a house for a shelter. Jonathan Smoke, chief economist at realtor.com, stated that this generation will drive two-thirds of household formations over the next five years. In fact, it will need five years ahead before they finally buy a house. Moreover, Smoke thinks that 2015 will mark the next five years where the Millenial generation’s presence in the housing market will be truly felt.
- Young People will Continue to Demand Housing where It’s Tough to Build
At the S&P Panel, Nobel Prize-Winning economist Robert Shiller pointed out that since the housing crisis, the total value of owner occupied housing has remained flat. This is because builders have not been constructing many single-family homes at all, a situation that the US economy hasn’t faced since the Great Depression.
- Mortgage rates will rise
Even though the market haven’t rise this year, but many analysts were convinced that mortgage rates would rise, as the impact on the back of an improving economy and the winding down of the Fed’s bond-buying stimulus program. However, Economists are still optimist that the price will raise in 2015. As it is stated by Smoke, the 30 year rate will experience 5% up by the end of next year and more than 100 basis point increases from today.
- Home Price Increases will Decelerate, but Affordability will decline
In 2014, market experiences a bit depleted as home prices goes up by 6.4% each year, after reaching 10.6% in 2013. Moreover, Fortune’s economists doubt that home values would continue to rise, that because the rebound from the bursting of the housing bubble has just about run out of steam, with Trulia’s Kolko estimating that homes are only 3% undervalued relative to fundamentals nationally.