5 Housing Market Predictions For 2015 Mortgage Rates Going To 6 Pct Maybe
5 Housing Market Predictions For 2015 Mortgage Rates Going To 6 Pct Maybe
Good morning (or evening if
you are getting this later Good evening).
I just read this great
article in Realtor.Com that is predicting interest Rates will rise to 6% by the end of 2015. There have been so many
articles in the past month from the NY Times, Wall Street Journal and Financial
Times, just to name a few, that is predicting 5% to 6% mortgage rates by the
end of next year. We re at a very low 3.875%
so these increases are huge and will have a dramatic effect on the real
estate market along with your monthly payments.
I have also been writing
for a long time to stop looking at housing prices going up or down $10,000 or
$20,000 that is not the ball to keep your eyes on, it is the mortgage rates.
To give you an example; You are buying a $500,000 (
For those of you outside Los Angeles, no I have not lost my mind at least not
for LA) You put 20% down, yes I am still talking LA , and you have a $400,000
mortgage. With a 3.875% 30 year fixed mortgage your monthly payment would be
$1880.95 while at 6.00% it would be $2400.00. Now if you increase your mortgage
to $425,000 at 3.875% your monthly payment is $1998.51. So you can see that
mortgage rates effect you much more then the cost of the house.
year is about to dawn—and the outlook on the housing market is definitely
brighter. After all, 2014 was the best year in the U.S. economic recovery since
the recession of 2008-2009.
accelerating economic recovery fueling job and income growth, prospects are
good for homeowners and would-be home buyers.
Rates Will Head Back Up
The flip side of the improving
economy is that (sigh) mortgage rates will inevitably head up again. We’ve
had a great run, but the honeymoon is over, and it’s time to settle in for a
relationship that balances job growth with higher-but-still-reasonable interest
Federal Reserve has indicated it will increase the federal funds rate—which has
an indirect but significant effect on mortgage rates—next year. The rate has
remained near zero since December 2008.
Although the Fed might wait as late
as early 2016, realtor.com®
Chief Economist Jonathan Smoke suggested the
increase will come in mid-2015, and mortgage rates will increase ahead of the
forecast for housing assumes the 30-year fixed rate will reach 5% by the end of
2015,” Smoke said. “The one-year adjustable rate will likely rise less if much
at all, and accordingly, we are likely to see a shift into more adjustable and
hybrid mortgages over fixed.”
Millennials Will Set Up House
The millennial generation is beginning its ascent—and no, not
all of these youngsters born between 1981 and 2000 are living with their
parents as they struggle to pay off student loan debt. Sure, they’ve faced huge
challenges in the job market, but employment is improving, and older millennials
are planning ahead.
65% of first-time home buyers are part of this older millennial group (ages
25-34), Smoke noted, pointing out that these young adults are at an age when
many marry and start families.
make up around 65% of first-time home buyers,” Smoke said. “Of the millennials
who are buying a home, 86% indicate that their motivation is a change in family
with tough credit qualification standards and limited credit history,
he added, millennials are expected to buy more in affordable areas in the
Midwest and the South.
than two-thirds of household growth in the next five years is expected to come
from millennials, according to Smoke. This generation is bigger than the baby
boomer generation, so even though its youngest members will be only 15 in 2015,
the market is only beginning to feel its impact.
Will Break New Ground
Although total housing starts
(construction on new housing
units) barely broke 1 million in 2014 and was driven by multifamily
homes, Smoke noted the pace will pick up in 2015 and shift in focus.
forecasting 16% growth in starts, driven now more by growth in single-family
starts, which we are expecting to grow 21%,” he said.
shortages of labor and building product material will limit further growth in
single-family construction and will keep overall supply tight.
constraints on new construction supply factor into our assumptions about
existing home sales growth and overall tight supply of homes for sale,” Smoke
Will Continue to Be a Major Factor
mortgage qualification standards are keeping many consumers, especially younger
ones, from buying a home with a bank loan. This situation has remained about
the same for the last four years, although it’s possible that various new
federal housing policy initiatives might help loosen those standards in 2015.
it will increasingly become clear that lack of access to credit is holding back
the housing market.
just look at the distribution of credit scores, at least 10% of current
homeowners with mortgages would not qualify for a new mortgage today,” Smoke
Opening up access to credit would be a game changer in the housing
market, Smoke noted, allowing 500,000 to 750,000 would-be buyers who are now
cooling their heels to achieve the dream of homeownership.
Close Out the Foreclosure Crisis
It’s been seven years since the
housing bubble burst and foreclosures skyrocketed, but in 2015 we’ll see the
end of that era. Already this year has seen a major improvement in the
composition of sales—that is, there are fewer foreclosures and short sales in the mix.
on pace for foreclosure inventories to end 2014 down more than 30%, and next
year should see a slightly greater decrease as foreclosures fall to normal
levels,” Smoke said.
while these trends will be apparent nationwide, housing is still a local issue.
situation differs in every market, even every neighborhood,” Smoke added. “Each
has its own unique, long-term trends in home values, which reflects local
demand and supply conditions.”
And the situation is different for
each individual home. Setting and negotiating a home price requires complex
analysis, which is why
most people prefer to work with an experienced REALTOR®.
le in Realtor.Com
I am Bob Schmalz a California Licensed Real Estate Broker, I am the founder and owner of West Los Angeles Real Estate Group, handling all Real Estate needs from residential to investments To name a few of the cities we cover in West Los Angeles; Beverly Hills, Santa Monica, Brentwood , Pacific Palisades and Malibu are some of the most popular. Our beliefs are that our clients should have the knowledge they need to make decisions in there Real Estate Goals. In this way our clients helps us make the right decisions for themselves.
FIRST TIME HOMEBUYERS:INTEREST RATES BELOW 4% + LOW DOWN PA
"Mr. Robert Schmalz
West Los Angeles Real Estate Group
Keller Williams of Santa Monica
Santa Monica, Ca. 90405
Thank you so much for your assistance in buying a home. I was not sure if the purchase of a Home would be in my best interest this late in my life, but now after having moved in…it is a great feeling.
Being a first time buyer, I would like to share some of my experiences. It is always fun to watch HGTV and see how simple it is to buy a home. And I thought, well that is not that difficult….Man was I wrong. Many of my homeowner friends told me all the weird things they encountered, but I believe my home purchase topped it all. -And in the midst of it - Bob ….by my side every step of the way…calming me down when angry, motivating when frustrated, happy hour when celebrating. He cared as I have never experienced before, ask and you shall receive.
Here is the thought process that led to the biggest purchase of my life.
There is probably no better time to buy then now. Will the market drop further? Maybe. However, by the time you decide the market could be on the way up again.
Why buy and not rent again? Rent would be close to the same amount of the mortgage without the benefits.
How did I pick Bob to be my realtor?
I interviewed a handful of real estate agents, and Bob was interested in me as a person, not just a client. Over the entire “buying process", handling my requests to see property on short notice...and I mean short notice (sometimes within a few hours), working closely with the seller's broker, mortgage broker, bank, escrow, Bob was there to assist and handle it.
Bob was reachable for me at any time and his communication was immaculate. We exchanged emails and text messages until late into the night.
Especially as a first time buyer, you need someone that you can trust, someone with integrity. It is a scary and stressful undertaking when you buy. Bob was able to make that process smooth and handled any emotional difficulties well. I doubt anyone else could have handled it any better.
With great appreciation,