Tag Archives: Economic growth

Five Things to Watch in Housing In 2015

January 9, 2015 jd

With lingering concerns about the recovery of the housing market, there are several key factors to watch in 2015, including affordability. It remains to be seen whether sales will pick up in 2015 if there’s more available for sale, and if those sellers realize prices aren’t rising the way they were one or two years ago. Slight loosening in access to credit may make the process of obtaining a mortgage less burdensome, but without an increase in incomes, there may not be sufficient buyers. Interest rates, inventory, and new construction are also important to monitor.
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Source: Wall St. Journal

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Five Real Estate Predictions for 2015

November 19, 2014 jd

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Expect the home-purchase market to strengthen along with the economy in 2015, according to Freddie Mac‘s U.S. Economic and Housing Market Outlook for November.

“The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” says Frank Nothaft, Freddie Mac’s chief economist. “Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”

Freddie Mac economists have made the following projections in housing for the new year:

Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year.
Home prices: By the time 2014 wraps up, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. “Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers,” according to Freddie economists. “Historically speaking, that’s moving from ‘very high’ levels of affordability to ‘high’ levels of affordability.”
Housing starts: Homebuilding is expected to ramp up in the new year, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.
Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.
Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.

Source: Freddie Mac

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May 2014 U.S. Economic and Housing Market Outlook

May 21, 2014 jd

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MCLEAN, VA–(Marketwired – May 19, 2014) – Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for May, showing that regular supply and demand forces continue to produce unexpected results as the housing recovery readies to shift into a higher gear during the spring home buying season. The complete May 2014 U.S. Economic and Housing Market Outlook and forecast table are available here.

Outlook Highlights

Projecting new home construction to increase by 18 percent, and house price appreciation moderating to an annual growth of 5 percent in 2014.
Maintaining new and existing home sales at 5.5 million for 2014, the same as for 2013, as the inventory of homes available for sale remains low in many markets.
Single-family originations are expected to drop about 35 percent in 2014 relative to 2013, based on the large decline in refinance volume. Refinance is expected to represent about 40 percent of this year’s originations, down from about 60 percent in 2013.
While net household formation continues to increase, the overall level remains lower than what would be expected; stronger job and income growth are necessary to support additional household formation.
Expect the 30-year fixed-rate mortgage to gradually rise higher, ending the year around 4.6 percent. We expect fixed rates to rise gradually during the second half of the year in part as a result of the Federal Reserve’s “tapering” of net MBS acquisitions.

Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.

“The housing recovery is struggling to shift into a higher gear, and obviously there are various imbalances holding this back from happening, but at the heart of the matter it comes down to jobs. Housing needs stronger, and just as important, sustained levels of job creation to get the housing engine firing on all cylinders. April’s jobs numbers were encouraging, and nothing will solve the supply and demand factors faster than keeping employment growth going. Until we see this happening, we’re revising our forecast lower in several areas on an annualized basis. While we still see an improving trajectory for the housing market, we’re pushing it out a few months from our earlier forecast because we expect GDP growth to pick up in the final three quarters of the year from what was clearly a dismal first quarter reading.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blogFreddieMac.com/blog.

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What Will the New ‘Normal’ for Housing Be?

January 30, 2013 jd 1 Comment

Mortgage giant Fannie Mae recently offered some predictions of what the housing market’s “normal” will look like in the next two years.

In its report, “Transition to ‘Normal’?”, Fannie says while the housing market has shown improvement, uncertainty remains over both the economy and the real estate market.

“Our forecast is that 2013 and 2014 will exhibit below-potential economic growth,” according to the white paper. “This is despite the fact that we expect the housing rebound will continue and that the economy will benefit from the gradual increased growth of U.S.-based manufacturing, as well as the expansion of domestic energy production.”

The following are some of the projections Fannie made in its report:

Mortgage rates to stay low: Fannie Mae expects mortgage rates to remain low over the next few years. The mortgage giant expects rates will increase to no more than 4.2 percent by the end of 2014.
FHA loans may get more expensive: More costs may be assigned to Federal Housing Administration loans.
Refinancing drops: The boom in refinancing may have peaked last year with slower activity projected this year. “We expect 2012 to be seen as the high watermark for refinances and 2013 as the first of several transition years as the housing finance market transitions back to a more normal balance between purchase and refinance activity.”
Foreclosures continue to fall: Fannie expects foreclosures to continue to decline from their peaks as more alternatives to foreclosure are pursued.
Housing starts to rise: Fannie Mae predicts that housing starts will increase 23 percent in 2013 — which would be 60 percent more than the record low in 2010. Fannie expects housing starts won’t reach sustainable levels until 2016.
Mortgage originations grow: “Given our expectations of continued improvement in housing starts, home sales, and home prices in 2013,” Fannie Mae writes, “we project that purchase mortgage originations will rise to $642 billion from a forecast of $518 billion in 2012.”

Source: “‘Normal’ Housing Market May Not be What it Used to Be,” Realty Times (Jan. 30, 2013)

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