After a boom, a bust, and a bounce, housing finally gets back to “normal.”
Housing should be a drama-free zone in 2015. “After the boom, the bust, and the recovery bounce, we are transitioning to a calmer market driven by fundamentals,” says Jed Kolko, chief economist at Trulia.
Even though the economy is growing and mortgage rates will remain low—the 30-year fixed isn’t likely to pass 5%—bubbly gains in housing are unlikely. Household income has barely budged since the housing market bottomed in late 2011, while home prices are already about 20% higher on average. Plus, with cautious lenders requiring hefty down payments and low debt/income ratios, it’s not as if buyers have the capacity to push prices sharply up.
All that figured in, CoreLogic forecasts a 4.4% rise in the national median home price. “That’s healthy and sustainable,” says chief economist Mark Fleming.
Here’s what to do if you’re thinking about buying or selling in 2015.
Sellers, forget bidding wars. In most markets you still have leverage, but less than you did. In the summer of 2013 about 20% of homes were selling at a premium to original list; this fall, 11% are, the National Association of Realtors reported. The takeaway: “You have to price your house right,” says Redfin chief economist Nela Richardson. Review recent comps and list within 5% to allow for counteroffers. More here.
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