A Look into the 2015 Real Estate Investing Crystal Ball
As we close out the 2014 investing year, we reflect on another great year for investors. While there was a deceleration in the rapid appreciation of home values the growth reflects a safer and more sustainable growth, we also saw Wall Street pull back on their massive buying spree as they are now low on funds and full of inventory that still needs to be rehabbed.
What is in store for the 2015 investors?
More Individual and Mom and Pop Investors: Many were intimidated by the massive competition that the institutional investors brought. These institutional investors are starting to bundle small packages and selling them to small investors as they are running low on funds and have many homes to renovate.
More Baby Boomers and Empty Nesters will become renters: Rental demand will increase in 20015 and Baby Boomers and Empty Nesters do not want to be mowing lawns and taking care of repairs, they want to live their life.
Basement Kids come out to rent: Millennials are young adults who actually have some great paying jobs. They have been living with Mom and Dad and now want to dip their toes in the water and get their own homes. This group of renters prefers inner city living and want to live near entertainment and jobs.
Home value gains decelerating: Home value gains decelerating is actually a good thing. While everyone wants to see big gains to their property values, these rapid price gains are what caused the economic collapse. So home value gains deceleration is a step in the right direction.
20015 will bring in a much more sustainable growth
This of course varies by market but nationally is forecasted at around 3%. If you’re looking for stronger equity growth you want to look in strong emerging markets to maintain sustainability.
Mortgage rates on the rise: We heard this one before (right!) this was a prediction for 2014 as well and it really did not happen, so why in 2015? The government pledged to cut back on Quantitative Easing in 2014, but what no one predicted was that many outside sources decided it was in their best interest to keep it going so the easing was funded by outside sources. These sources are also now drying up so the 2015 prediction is you will see prices rising as the year progresses. Nothing huge, probably just under 5%, but rates look to be on the rise probably starting around the second quarter.
Rental shortages: As the economy rebounds and an increase of housing formation emerges along with the rapidly growing population, the supply of rental housing will continue to be in short supply keeping an upward squeeze on the rental rates.
Housing starts on the rise: For almost a decade the housing starts have been below historical averages. Builder confidence is up as is the demand for housing. Expect to see about a 20% increase in housing starts throughout 2015.
Confidence in residential housing continues to rise: Housing continues to return to normal as we return to the more common application of supply and demand. The common fundamentals of real estate returns.
Job creation will continue to strengthen: Jobs are looking positive for 2015 as well. What still remains to be seen is the direction of wages. It is the flat growth of wages that creates a slow housing recovery. Lower unemployment however means an employer must start competing to get a quality workforce in place. This creates wage build up while employers try to offer financial incentives to workers to come work for them.
Short sales and foreclosures continue to be reduced: As the economy recovers, the negative equity also rebounds into positive equity, equating to fewer distressed homes. The current inventory being held by banks is also being absorbed.
I believe 2015 will bring back some normalcy to the market. We are now to the point where the economic conditions can once again dictate the true strength of a market.
Investors looking for safe and sustainable returns will find them in markets with good job growth that has most recently started their recovery. Investors who were fearful of the rapid changes to the economy will now be comforted in knowing we are back to sustainable growth with a better balance to the market.
Want to find out which markets I recommend for this kind of positive job growth? Join the Equity Builders Real Estate Investment Group Buyers Today for FREE! Click here now!