The Super Bowl is history, marking the start of a new high-stakes season: the spring real estate market. After what many industry insiders considered a disappointing 2014, hopes are high for 2015.
Among factors contributing to those hopes are continued low interest rates, new 3% down-payment programs from Fannie Mae and Freddie Mac, and an improving economy.
Builders anticipate a boost in single-family home construction starts — critical to their long-term health — to 804,000 units nationwide, still well below the 1.5 million pre-downturn level.
New-home sales are expected to reach 536,000, said National Association of Home Builders chief economist David Crowe, compared with 436,000 in 2014. That's less than half the 1.3 million sold at the U.S. market peak in 2005.
Realtors are hoping a surge of millennial buyers — those born between the early 1980s and the mid-to-late 1990s — will boost sales of previously owned homes this year, after 2014's numbers closed 3% lower than 2013's nationwide.
The eight-county Philadelphia region fared better in 2014, with a drop in volume of only 0.36%, or 196 fewer sales, than in 2013 (53,854 versus 54,050), according to Berkshire Hathaway Home Services Fox & Roach's HomExpert Market Report, based on Trend Multiple Listing Service data.
Still, those numbers remained below the pre-downturn annual average of 60,000 sales, said Kevin Gillen, senior research fellow at Drexel University's Lindy Institute for Urban Innovation and chief economist for Meyers Research.
Not everything points to a rosy regional real estate picture for 2015. For example, there is still a lot of distressed housing to be sold off, especially in South Jersey.
Nationally, 7.1 million, or 13%, of the nearly 44 million houses with mortgages fall into the category of distressed (having 25% or more negative equity), according to RealtyTrac, which tracks U.S. foreclosures. That level is 5.8 million fewer than at 2012's foreclosure-crisis peak.
In its Home Data Index released Monday, real estate data provider Clear Capital said that "with more equity to play with, midtier homeowners could move up, creating more opportunity and driving healthy demand in the low and midtiers of the market" — meaning first-time buyers.
There had been concern about interest-rate resets on the first of thousands of loans modified under the federal Home Affordable Mortgage Program. But Greg McBride, of Bankrate.com, said it was more about "letting these borrowers know to expect higher payments" — one percentage point a year for five years — than about defaults flooding the market.
Lenders complain about the "avalanche" of new rules affecting their ability to make mortgages available to home buyers.
Independent Community Bankers of America president Camden R. Fine said "significant percentages" of his membership "are considering an exit from this line of lending or are exiting the market."
Moreover, some economists worry that continued problems with low wages and non-mortgage debt will derail the expected entry of the millennials into the market this year.
RealtyTrac cited this debt, primarily student loans, as closing off homeownership in more than half of U.S. markets, even with the 3%-down mortgage becoming more common in the conventional-loan arena.
First-time buyers will continue to favor resales over new construction, said Erik Franks, of John Burns Real Estate Consulting in Irvine, Calif.
"While a number of homebuilders are traditionally known for building entry-level homes, those builders have really always focused on the more affluent first-time buyers," Franks said.
"As the price difference between new and resale homes has increased to an all-time high, more first-time buyers are being priced out of the new home market," he said, noting that 92% of 2014 home purchases were resales.
©2015 The Philadelphia Inquirer. Distributed by Tribune Content Agency
