What’s in Store for 2015?
By Michael Ardolino, Broker-Owner, Realty Connect USA
Early January 2015
We characterized 2012, 2013, and 2014 as the years of the turn-around, nascent recovery, and increased momentum, in that order. What will 2015 bring?
- Long Island’s employment picture is much improved. As noted by Long Island Business News, economic confidence is rising. Local corporate executives are optimistic about hiring and pay increases. This is a positive sign for housing in 2015.
- Home price increases will be modest. Suffolk’s inventory is high, at 10 months (see Exhibit 1). A balanced market has 6 months of inventory. Also, NY has the second highest foreclosure rate in the U.S. (see Exhibit 2). Both of these factors tend to exert pressure on prices.
- The Fed is likely to start raising rates in June. Fannie Mae, Freddie Mac, and the Mortgage Bankers Association all predict higher rates (see Exhibit 3). Savvy players will act now. The effect of rate increases on home affordability cannot be overstated.
- Millennials (age 18-34) are finding a more favorable economic climate and employment outlook. As noted by Mark Zandi, Chief Economist at Moody’s Analytics, “It’s already begun that millennials are going back to the market.”
(“Housing 2015: The return of first-time home buyers,” CNNMoney.com, 12/28/14)
- Rising rental rates, making home ownership even more financially advantageous, are another factor leading millennials into the market. As recently stated by Douglas Duncan, Fannie Mae’s Chief Economist, “The improving economy is going to put renters in a better place to buy.”
Our next report will cover local year-end stats and further projections based on those stats. Meanwhile, please feel free to contact me at, 631-941-4300 or Michael@Ardolino.com.
I’m always happy to share helpful real estate information, by publishing educational newsletters, speaking at real estate forums, and arming people with all the data they need to make confident, informed real estate decisions.