First time home buyers returning to housing market in 2015
First time home buyers have been conspicuously absent from the housing market during the last few years. Tightened lending standards plus huge down payment requirements kept them on the sidelines.
Last month (December 2014), both Fannie Mae and Freddie Mac announced that they are now offering mortgages with as little as 3% down payments, which will make it easier for first time buyers to save enough cash to purchase a home. Additionally, for those who are a little more credit challenged, FHA has reduced their up-front mortgage insurance by 50 basis points.
“It’s already begun that Millennials are going back into the market,” said Mark Zandi, chief economist for Moody’s Analytics.
According to the Mortgage Bankers Association, sales of new homes are expected to climb by more than 13% in 2015, while existing home sales are expected to increase by 5%. A spike in the number of first-time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones, said Zandi.”
As more buyers are able to enter the market and builders are finally getting into stride with new home production, we should see an increase in inventory. This should result in a slowdown in home price and value increases and result in a more stable housing market.