Industry watchers differ on how strong the 2015 expansion will be, but the concur that housing sector growth will continue. Here are three reasons for the expansion.
Even with the increases in housing in 2014, many consumers were still feeling wary of buying home because the Great Recession. Many families have delayed buying their first home or upgrading to a new home because of job insecurity, worries about taking on additional debt, and fears of financing being difficult to obtain.
Several months of positive economic news has consumers feeling increasingly confident about the economy. The pent-up demand is expected to begin pouring into the housing market in 2015.
Big Gains in Job Growth
Now that job growth is rapidly drawing down the number of unemployed and underemployed, more people are expressing optimism about the economy and are expressing intentions to buy a new home in the first quarter of 2015. Jobs and housing, not surprisingly, are strongly correlated. If past patterns hold, the continuing upsurge in the jobs numbers should mean an equally strong upsurge in homebuyers in the first half of the year.
Strong job growth also tends to put more upward pressure on wages. The more workers earn the more they have to spend on housing, and the more likely they are to take on larger mortgages. Consumer’s attitudes toward job security are also finally showing so positive trends.
Increasing Numbers of New Households
The Great Recession kept many young adults, the so-called Millennials, living at home much longer than any previous generation in recent memory. With fewer new households being formed, housing starts were depressed. The strong economic climate is finally motivating more Millennials to start their own households.
Many will simply rent, but by adding more people seeking housing, rents will go up and the incentives for buying a home will increase for households, previously wary of buying. Additionally, some of the Millennials will buy houses, pushing up demand.
2015 appears to be the year housing will finally be able to put the Great Recession fully behind it. While the leading economists all vary in their assessments of how strong the growth in housing will be, they are bull bullish on housing.
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