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Big Time Increase Predicted for Housing Market in 2015
Housing market news has been up and down over the past few years. There are many variables that go into how good or bad the housing market performs. One company, Altos Research, claims to provide a more objective view of the chaotic world of housing market reporting.
Days before its official release, HousingWire was able to get a sneak peek into a report published by Altos Research. The report’s data claims to prove the housing recovery naysayers wrong, saying that the market is taking off in 2015.
Altos Research’s CEO Michael Simonsen says, “While we see signs of demand easing, we are significantly more bullish on housing than many of the recent headlines seem to suggest. Based on our models, we’re forecasting another year of home price appreciation, with a 7 percent home price increase for the year of 2015.”
While other housing experts predict depreciation in the housing market, Altos’ assessment shows single-digit appreciation in the market. The report also states that the main driver of negativity surrounding the market is the media.
The report’s section titled, “Bearish Headlines, Bullish Reality,” the researchers stated: “In our view, these attitudes reflect a myopic view of actual market conditions and conflate concerns over the mortgage industry, the otherwise-constrained new construction market, and more broadly, the long-term financial stability of the U.S. consumer with specific current housing market supply and demand dynamics. While these are valid long-run concerns, the variables impacting home prices have proven to be driven by low available supply and growing household formation.”
What supports the Altos view that housing prices and inventory will respectively increase 7 and 10 percent?
The report states “As inventory and transactions rise along with pricing, participants in the housing market stand to benefit broadly”. Also, the number of days on the market is comparatively low which indicates that it’s a seller’s market. Sellers can list homes at a higher value, with hopes that a buyer will bite. If the buyer doesn’t accept, the seller can then reduce the price closer to market value and give the appearance of offering a great deal to the buyer.
Despite weaker overall demand, Altos estimates that about 35 percent of properties will have such a price cut, which they see this as an indicator of strong competition. Altos noted that the housing market continues to require that subtle fluctuations are noticed in its future.
The report concluded, “Home prices across the U.S. are poised for a fifth consecutive year of recovery. The market is still faced with low inventory and demand, buoyed by an expanding economy, which, among other factors, remains healthy. Both supply and demand conditions are moving from extreme bullish conditions to healthy condition.”
HousingWire. “Altos: Critics wrong about housing, it’s going to soar” 30 July 2014. http://www.housingwire.com/articles/30840-altos-critics-wrong-about-housing-its-going-to-soar