Housing Market 2015 – Real Estate Investing is Back
Housing Market 2015 – this is definitely the year of the real estate recovery. Nine years after the housing bubble reached its highest point and four years after real estate prices bottomed, we are finally seeing a steady recovery. Prices had started to sharply increase towards the end of 2013, but some areas of the country still fell behind the curve. 2014 saw the biggest spikes in values across the country, although areas in the West and especially Southwest, are going to see their best appreciation this year.
Housing Market 2015:
The housing market this year is closely driven by underlying economic fundamentals–job growth, incomes, household formation.
I would like to point out a few facts that are part of the housing market 2015:
- Mortgage rates are increasing – however the new 3 percent down payment products coming from Fannie Mae and Freddie Mac should have a positive impact on the market as they enable more first-time buyers who have good credit but limited assets.
- New home constructions have been increasing due to higher demand – Home Depot, Lowe’s and other companies with close ties to the housing market are at their highest level since 2007. New and existing home sales are expected to increase by as much as 20 percent in 2015.
- Rental demand is sharply increasing – more young people are getting jobs and forming households. However they are not in a position yet to purchase a home and they will be looking more for rentals. Rental supply is diminishing, therefore rental rates will be increasing. At the same token, because rents are increasing at a faster pace than home value growth, a lot of renters will be considering purchasing instead, especially low to medium value homes.
- Foreclosures are down to pre-recession levels – the majority of foreclosures come from homes that have long been in the foreclosure process, with just a few newer properties in the mix.
- Global geopolitics are actually helping US economy and housing market – economic weaknesses in China and Europe (Euro Dollar) are actually helping the US average homeowner to access mortgage products at competitive rates and facilitating borrowing power. The global economic situation is helping keeping mortgage rates at lower than average levels.
What does this all means to the real estate investor and what are the best strategies to get into this housing market 2015?
Buy and Hold, and Fix and Flip, are probably the most lucrative strategies in 2015.
Since home sales, both existing and new, have been definitely increasing, there is a demand for homes for retail buyers.
“Multi-family housing starts have rebounded back to normal since the downturn, mostly due to the strong demand for renting,” says National Association of Realtors’ Chief Economist Lawrence Yun, who also notes that renter households have increased by 4 million since 2010, while homeowner households have decreased by 1 million.
Wholesalers (or Flippers) investors are highly needed to find those undiscovered properties that are sitting there waiting for a rehabber or a landlord. A lot of homeowners have moved on for a variety of reasons, and many properties are vacant, free and clear (no existing mortgage) or foreclosed waiting to be put back in circulation.
The other phenomena that is interesting is that there are a lot of cash investors coming forward – they have the money to invest and they want properties to either own as part of their portfolio or loan their money out to a rehabber by creating a joint venture partnership.
I just want to point out that you don’t have to tackle all these strategies at the same time. As a real estate investor you just have to pick and choose which strategy is more interesting to you and your goals and develop a plan of action to master that strategy, since this is definitely the “year of real estate investing” as defined by Forbes magazine.
Would you like to discuss the best strategy for you and how to make the most of the housing market 2015 as a real estate investor?