Last year was a seller’s market for sure. Rates were low and you had a lot of buyers that were looking for homes despite the slumping housing market. So What does 2015 have in your store?

Rising Mortgage Rates

The last few years have seen very low interest rates due largely to the Federal Reserve’s bond buying program. But the Fed has showed signs of slowing it’s bond buying program which will mean that the rates are going to rise this year. This happened in September of last year when the banks starting talking about tapering the amount of bonds they would buy which caused rates to start to rise. Even though the rates have been low the last few years you can expect them to come back in 2014.

Appreciation will Slow

Last year, the home appreciation values floated at around a 5 percent increase. However, this year she also predicts that the appreciation rate will slow to a 3 percent. During the months of 2013, many homeowners were vying for a tight inventory of homes, and so bidding wars erupted across the country as a seller’s market became increasingly apparent. Sometimes, the competition was so fierce that traditional buyers were competing with the offers of companies that buy houses all vying for the same property. This year the market is more likely to stabilize into normal conditions.

When you have more stable conditions in the housing market the appreciation rate will slow, even though you will have slightly higher rates. Because of this the pool of investors that are going to be looking to buy investment properties will be lower, which will also lead to less competition overall.

Low Homeownership Rates

During the peak of the housing bubble there was nearly 70% home ownership was at the highest levels it had been in many years. Because many of these people were not ready for owning a home these properties fell into foreclosure as mortgage payments were missed. This lead to a high number of foreclosures and short sales and that lead to home values quickly declining because homeownership was not seen as a profitable enterprise that it had once been. During 2014 this will lead to a lot more people renting homes instead of buying them for themselves. The level of homeownership will almost certainly drop below 70% and may well drop to under 65% by the time the end of the year hits.

What does it mean to you?

As someone selling a home this will mean that you should not expect the bidding wars that had taken place in years past. There will still be a large investor of houses on the market but more people will be moving towards renting. This does not mean that it is going to become a buyer’s market, and at best things will level out. The early part of the year will likely see a lot of buyers trying to pick up a house before the interest rates rise in the latter half of the year.

If you are buying a house this works well for you as you won’t have to compete with the same amount of people as you would have at the height of the bubble which will lead to more incentives. You will also find it likely that banks will make it easier to secure a loan, but you will also pay a higher interest rate due to market as a whole. You would be wise to look earlier in the year if you can plan your home purchase.

This article has only spoken about the national real estate market so it only gives you a high level overview of the market. When you are looking at real estate you really need to look at the local level because there are always going to be trends specific to one neighborhood and not another.

The most difficult part of a home sale is finding an ideal buyer. By preparing yourself and your home before putting on the market, you can help raise the odds of finding and keeping a buyer. Check out our blog to find out how!