So far, the U.S. housing market has performed quite solidly in these first few months of the year, but the future is a bit murky, considering the possibility that the U.S. Federal Reserve may begin raising interest rates in June. Some have posited that this could be a trigger for another “summer spike” like what we saw in 2013, and this may be something the housing market can ill afford.
The real estate market, after all, wasn’t too buyer-friendly in 2014, due to rapid price hikes and lower inventory. But what about 2015’s spring home buying season? Will this year’s spring home buying be as prosperous as it usually is? Here are some of the things you can expect in the coming months.
Data from mortgage buyer Freddie Mac shows 30-year fixed-rate mortgages averaging 3.76 percent in February, which is significantly lower than the year-ago average of 4.33 percent. In a recent statement from Freddie Mac deputy chief economist Leonard (Len) Kiefer, he stated that current variables in and out of the mortgage market should keep rates low throughout the spring.
“Lower rates help to offset some of the recent increases in house prices and keep home buyer affordability high,” said Kiefer, who doesn’t predict a “major turnaround” in terms of global growth, hence “continued downward pressure’ on mortgage rates.
Further, Kiefer and Freddie Mac do not expect mortgage rate increases to be that egregious, even if the Fed raises short-term rates as early as June.
So with mortgage rates out of the way, what about those rapid home price increases? Thankfully, price appreciation has slowed down in recent months, and while that hasn’t led to an uptick in sales due to low inventory (hence more price increases), most experts are confident that things may change in the spring. But inventory, unfortunately, may still be a bit of a concern, as it’s one thing to qualify for a home loan at a low rate, but another thing to find the right home to go with the low rate.
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