As Yogi Berra once said, “The future ain’t wha it used to be,” and its an appropriate description of the Real Estate outlook for 2015. Six years after the economic crisis finds consumption and capital investments continuing to rise steadily and employment has grown an average of 2.0 percent.
But the most important economic development is the employment growth for millennials, those individuals between 25-29 years old is up 3.0 percent. This is vital information for Real Estate trends because this is the first time home-buyers segment of the population. Moreover younger households tend to be more mobile and are larger consumers which should manifest into more home sales and an increase in housewares departments across the land!
Oil prices have dropped 45 precent since June. US households spend more than $1800 annually on residential energy consumption so the drop in oil prices will make residential real estate seemingly much more affordable and feasible for young couples.
Stronger economic fundamentals mean that demand for housing should increase. It is estimated that residential real estate will increase as much as 9 percent over 2014.
However this good news remains somewhat muted by the continued tightened reigns of lending. Debt-to-income ratio, loan-to-value ratio and credit scores continue to be the three top drivers of underwriting and we don’t see these reigns loosening up any time soon.
Overall the economy appears to be gaining much needed momentum which is a much needed and welcomed improvement to support a housing market in need of stronger recovery. Millennial job growth and a drop in oil prices cannot be overstated enough because they directly impact mobility, transportation and consumption all of which also directly affect consumer confidence. And confident consumers typically buy bigger ticket items such as homes, which is sweet sweet music to the ears of those in the real estate market.
Julie Tache is the owner of Homes with Cachet, a boutique Real Estate firm in Charlotte, NC. Download the app today: Visit Google Play or the App Store and type in: Homes with Cachet
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