As we head into the New Year it’s a good time to reflect on the housing market in 2014 and how it will drive the New Year. Let’s start at the beginning of the last year and follow the trends to see what is to come for the Orlando real estate market:
In January and February of 2014, the Orlando housing market saw drastic increases in value. The median sales price was up 17-18% from 2013. Throughout the year, as prices rose, many more homeowners began to list their homes for sale as they realized they finally had equity. That extra supply caused prices to stabilize a bit in more recent months.
The year to year increase in values has gone down over the last year, yet there is still positive growth for Orlando home values. In fact, just last month the median price was still up 6.45% from the same time last year.
As the home prices have risen, the general home affordability in Orlando has declined. However, the interest rates for 2014 remained historically low…in fact they have dropped recently to lower levels than this time last year. These low rates have allowed many buyers to qualify for homes that might not have been able to if the interest rates had spiked as well.
What does that mean for 2015?
It will probably be a pretty “normal” kind of year and more of the same that we have seen recently. Considering the last 6-7 years in the real estate industry has been a roller coaster, I think a normal market will be pretty welcome around here.
1. Home Values will Likely Go Up:
We will likely continue to see increases in values but at a more reasonable rate as we saw last month. A normal market typically increases at 3-5%.
2. Rates for Now will Remain Low for Now:
Affordability is down due to the values going up over the last 2 years. That lack of affordable housing may continue to grow if the interest rates rise. But for now they are still historically low and have actually declined in the last few months. The Federal government has already started to slow the purchasing bonds which held the interest rates down for so long. It is inevitable that interest rates will go up, but for now factors outside the U.S. are keeping them below the historic range for the foreseeable future.
A few things to watch for 2015:
One of my favorite economists over at Trulia.com, Jed Kolko, has said that the housing market largely depends on Millenials AKA Generation Y. Because of the recession it has taken longer for these kids to get jobs and thus save for a down payment. As the economy as a whole improves and this new generation of buyers begins their lives, we may continue to see this new base of buyers increase.
We are also at an interesting point in time where homeowners who sold their homes in 2008-2012 as a short sale may actually begin qualifying for mortgages again in 2015. That opens up a new pool of buyers that have not been qualified to buy over the last few years.
It will be interesting to see who drives the market in 2015, but one thing is for sure it is likely to be a good year with market gains at moderate rates and a nice steady flow of buyers. We will call it “normal”…and well that sounds like a breath of fresh air to me.
What do you think will happen in the real estate industry in the New Year? Thinking of making a move? Now is the time to move into something larger and take advantage of the interest rates for a larger mortgage. Contact me to get started today. Or Search Orlando homes for sale today.
Happy New Year to you,
Do you love where you live? #heartorlandohome