2015 Forecast Gains Ahead

2015 Forecast Gains Ahead

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Alone among big Western economies, the United States is poised for solid growth in 2015, fueling job creation and keeping home sales on an upward path. The National Association of REALTORS® forecasts that existing-home sales will reach 5.3 million, an increase of almost half a million over 2014. The national median home price will rise, too, but at a sustainable 4 percent rate, to just below $216,000.

Increasingly confident renter households will enter the homebuying market after watching rental growth rates hit a seven-year high. And households that were forced into foreclosure or a short sale during the housing crisis several years ago could begin streaming back to the market, too.

Sales will be bolstered by the expected return of more reasonable mortgage underwriting standards that were in place prior to the housing boom. This shift by lenders will help soften the impact of gradually rising interest rates, which NAR expects to top out just below 5 percent this year. If interest rates defy expectations and remain close to where they are currently, this will be another boost to housing sales, says NAR Chief Economist Lawrence Yun.

On the commercial side, continued modest improvement in vacancies, absorption rates, and rent growth is projected for all the major sectors in 2015.

The big unknown for real estate is the health of the global economy. If the economies of Europe and other powerhouses continue to lag, further U.S. growth could be stymied, slowing the expansion of residential and commercial markets.

  2014 2015 2016
GDP growth 2.2% 2.7% 2.9%
Existing-home sales (millions) 4.90 5.30 5.40
New-home sales (units) 440,000 620,000 700,000
Housing starts (units) 1,000,000 1,300,000 1,400,000
Home price (median) $ 207,600 $ 215,900 $ 225,300
Fed funds rate 0.1% 0.4% 1.6%
30-year mortgage 4.2% 4.9% 6.0%
Vacancy rate 16.2% 15.7% 15.6%
Net absorption (sq. ft.) 35,586 48,841 55,026
Completions (sq. ft.) 27,073 42,154 44,460
Rent growth 2.6% 3.3% 3.6%

Vacancy rate 8.9% 8.5% 8.1%
Net absorption (sq. ft.) 110,652 102,463 105,780
Completions (sq. ft.) 81,009 71,349 62,097
Rent growth 2.4% 2.9% 3.1%

Vacancy rate 9.8% 9.6% 9.4%
Net absorption (sq. ft.) 11,350 18,871 23,792
Completions (sq. ft.) 7,747 11,711 15,924
Rent growth 2.0% 2.5% 3.0%

Vacancy rate 4.0% 4.1% 4.2%
Net absorption (units) 216,296 171,167 143,626
Completions (units) 180,796 210,669 165,339
Rent growth 4.0% 3.9% 3.5%
All tables use data compiled by NAR Research.
Figures for 2007–2013 are actual; figures for 2014–2016 are projected.


Wealth Gap      
Household Wealth: Owners vs. Renters      
  Owners Renters Difference
1998 $132,100 $4,200 31x
2001 $172,600 $4,800 36x
2004 $184,700 $4,000 46x
2007 $234,800 $5,100 46x
2010 $174,500 $5,100 34x
2013 $195,400 $5,400 36x
Source: Federal Reserve Survey of Consumer Finances

Steady Gains
(existing-home sales)  
2009 3,820,000
2010 4,190,000
2011 4,260,000
2012 4,660,000
2013 5,090,000
2014 4,937,000
2015 5,295,000
2016 5,380,000
Source: NAR  

Profitability Expected
Expectations over the next 12 months (percentage of firms)      
  Less Same More
Residential Firm 8 26 66
Commercial Firm 6 23 71
Source: NAR      

Want to Buy
Gen Y attitudes on home ownership  
Home ownership is an important long-term goal 75%
Home ownership is an excellent investment 73%
Among renters, belief owning a home makes more sense 59%
Among renters, belief it’s difficult to get mortgage 73%
Source: Fannie Mae, 2013 Demand Institute Housing and Community Survey

BY ROBERT FREEDMANReprinted with permission from Realtor Mag.©2015. All rights reserved.

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Phone: 773-865-8575
Dated: March 1st 2015
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About Stephany: #88 Real Estate Agent in Illinois Featured in Chicago Agent Magazine Who's Who in Real Estate 201...

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