5 Real Estate Predictions for 2015

According to Freddie Mac’s US Economics and Housing Market Outlook for the month of

Real estate Predictions

November, home purchase market will strengthen along with economy in 2015. Freddie Mac's chief economist says “The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better”. Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.

Freddie Mac economists have made the following projections in housing for the New Year:

Mortgage rates

 Interest rates are predicted be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dropped 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 2014.

Home prices

By the time 2014 ends, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent by last year. Appreciation is expected to drop further to an average of 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 is moving from 'very high' levels of affordability to simply 'high' levels of affordability."

Multi-family mortgage originations

Mortgage originating from the multi-family sector have surged about to 60 percent between 2011 and 2014. This Increase is expected to continue in year 2015, and projected to rise about 14 percent.

Housing starts

Home building is expected to increase in 2015; it is projected to rise by 20 percent from this year. That will help total home sales to climb up to 5 percent, reaching the best sales pace in eight years.

Single-family originations

Mortgage originations of single-family homes will drop by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancing is expected to make up 23 percent of originations in 2015; they had been making up more than half in recent years.

For more information Contact