Semi-rosy outlook for housing market
Real-estate analysts predict 2015 will be better for the housing market than 2014. How much better?
A 10 percent increase in home sales would be a “realistic expectation,” according to Guy Cecala, publisher of Inside Mortgage Finance. “Frankly, if we just continued what we saw in the second half of 2014, we’d be up 10 percent.” But, that’s only if interest rates don’t shoot up too much, and unemployment continues to decline.
How about prices? What’ll happen to them in 2015?
“We are predicting that the price of the average existing single family home will come in around 2.8 percent year-on-year for 2015, ” says Stephanie Karol, a U.S. economist with IHS Global Insight. In other words, prices will increase around 2.8 percent this year, compared to more than 3 percent in 2014.
So, it’s all sweetness and light for the housing market in the coming year?
Not quite. A housing Grinch looms in the background. “Just put a green face on me,” says Anthony Sanders teaches real estate finance at George Mason University. He says a big shadow is looming over the 2015 housing market: wage growth. Wages have only increased by around 2 percent, but Sanders says we need 5 or 6 percent wage growth for people to have enough money to buy a house.
The jobs being created in this economic recovery don’t pay enough to support buying a home, he says. “Mostly service industry…. You know, wait staff. And those are not people that are traditional homeowners.”
Until wages pick up, Sanders says, we’ll have to rely on foreign investors who still see U.S. housing as a bargain.
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