Real estate’s outlook should put you in a good mood. National Mortgage News recently highlighted the following four reasons why the housing market will likely strengthen over the next several years:
1. Low interest rates.
The Federal Reserve recently hinted that it may delay future rate hikes. This could help keep mortgage rates low. The 30-year fixed-rate mortgage today remains below 4 percent – which means savings in the financing costs for home buyers.
2. Strengthening job and wage growth.
The unemployment rate in the U.S. has been in recovery mode the last few years, and is now at 4.9 percent (after reaching 10 percent during the recession). Wages are on the rise too: Average hourly earnings rose 2.5 percent year-over-year, according to the U.S. Bureau of Labor Statistics report from January.
3. The millennial debut.
This 75 million strong cohort may have initially delayed home ownership but they’re on board now. The oldest millennials are now in their mid-30s, and as they start forming families and advancing in their careers, they’re drawn to home ownership. They are expected to have a significant impact on housing and mortgage markets: “Over the next decades, a total of more than $30 trillion will be passed from baby boomers to millennials, fueling a housing boom that will be strong and long-lasting,” the National Mortgage News reports.
4. The comeback buyers.
For owners who lost their home to foreclosure during the recession, they are gradually re-entering the market and are expected to become a growing force. Following a foreclosure or short sale, these home owners were required to stay out of the market for a two- to seven-year waiting period as they repair their credits and become eligible for financing again. Many of these boomerang buyers are re-entering markets now. RealtyTrac estimates that more than 7 million Americans lost their homes during the recession – and that means the buying pool is huge. “The number of boomerang buyers eligible to return to home ownership will surge over the next year, peaking in 2018 at more than 1.5 million,” the National Mortgage News reports.
Source: “Four Reasons to Be Enthusiastic About the Housing Market,” National Mortgage News (March 10, 2016)