The outlook for real estate this year is good, according to National Mortgage News, which recently came up with four reasons why we can expect housing markets to strengthen over the the next few years.
1. Strengthening job and wage growth
According to National Mortgage News, the unemployment rate is recovering, down to just 4.9 percent from a high of ten percent at the height of the recession. People's wages are increasing too, with the average hourly earnings made by U.S. workers rising by 2.5 percent year on year, according to statistics from the Bureau of Labor.
2. Low interest rates
Interest rates have been low for years, and the good news is they're unlikely to go up by much anytime soon. The Federal Reserve recently said it may delay any future hikes, which would help to ensure that mortgage rates stay low. As of now, the 30-year fixed-rate mortgage is below four percent, which means home buyers can realize big savings on their monthly mortgage repayments.
3. Millenials are making an entrance
The millenial generation might be 75 million-strong, but to date its largely delayed getting into home ownership. But that's no longer the case, with the oldest millennials now being in their mid-30s, it's time for them to start making families and building a strong career. As such, this demographic is increasingly being pulled into home ownership, and will have a significant impact on the market in the next few years.
“Over the next decades, a total of more than $30 trillion will be passed from baby boomers to millennials, fueling a housing boom that will be strong and long-lasting,” National Mortgage News said.
4. Boomerang buyers are bouncing back
Former homeowners who lost their properties during the recession are slowly but surely re-entering the market. National Mortgage News expects people in this category will eventually become a force to be reckoned with, and sooner rather than later. That's because ex-homeowners need to wait for between two and seven years following a foreclosure or short sale in order to rebuild their credit rating, and many are now becoming eligible for new financing. According to RealtyTrac, some seven million Americans lost their homes in the recession, which represents a big pool of potential buyers.
“The number of boomerang buyers eligible to return to home ownership will surge over the next year, peaking in 2018 at more than 1.5 million,” National Mortgage News said.