Photo Credit: JT Tarantino
Millennials settling into careers and family life
Millennial buyers are expected to power a stronger and more expensive housing market in 2015. This is according to a Realtor.com 2015 Housing Forecast. One of its five big predictions for 2015 is a big increase in first-time buyers led by millennials who are eager to buy into the American dream.
This prediction mirrors a Zillow report which in early December, forecast a housing market recovery driven by millennial buyers in 2015. According to this report, 42 percent of millennials say they want to buy a home within the next five years.
Millennials, while known for not getting married and starting families until later in life, Realtor.com foresees more buying among this demographic because millennial family growth is on the increase. Not all millennials are living with their parents and struggling to pay off student loan debt. Their employment prospects are improving and older millennials are now looking at the future.
Jonathan Smoke, Chief Economist for Realtor.com said, “In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery. If access to credit improves, we could see substantially larger numbers of young buyers in the market.”
Smoke predicts that 65 percent of household formations during the next five years will be driven by millennials and out of this number, 86 percent will be motivated by household size changes. Adding 2.75 million expected jobs to this mix, drives first-time buyer sales. “However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South”, said Smoke.
The Realtor.com report foresees Atlanta, Dallas, Denver, Des Moines and Houston as the most promising growth metro areas in 2015, expecting home sales between 5 and 14 percent growth. The report also expects overall homeownership to decrease, despite an increase in millennials buying. Realtor.com predicts that existing home sales will see an increase of 8 percent because of buyers being motivated about the possibility of interest rate and sale price increases.
The year-over-year home sale increases, while similar to 2012’s market numbers, the type of housing will be more normal with minimal amounts of distressed properties, according to the Realtor.com report. The report expects home prices to increase 4-5 percent nationally, which will help make homes 5 to 10 percent less affordable in 2015.
Realtor.com. 5 Housing Market Predictions for 2015
MReport. “Forecast: Housing Stage Set for Millennials”