Recently, the U.S. economy received a significant lift as the latest reports showed a notable rise in our Gross National Product (GNP). This indicator provides a broad look at all segments of our economy, and while many global markets are currently struggling, the U.S. continues to show resilient growth.
As we head into 2015, several key indicators suggest a strong year ahead for the housing market:
1. The "Purchasing Power" Boost
Overall employment is on the rise, with the national unemployment rate dropping to 5.7%—the lowest it has been since 2008. Simultaneously, fuel prices have plummeted, dropping roughly 40% in the second half of 2014. These two factors are putting more money back into the pockets of potential homebuyers, directly increasing their "purchasing power."
2. Local Inventory and Price Stability
After seeing more stability in our local housing market this year, we may begin to see home prices edge upward. As local inventory declines, the classic law of supply and demand takes hold. A smaller selection of homes often leads to more competitive offers and gradual price appreciation.
3. The Interest Rate Conversation
The one area of concern for would-be homebuyers is the potential for rising interest rates. As the economy improves, there is a possibility that the Federal Government may ease back on credit restraints, which could force rates to rise. Historically, a stronger economy leads to higher consumer confidence—when folks feel better about their financial future, they tend to spend more on capital goods and housing.
Why Optimism Wins in 2015
A stronger economy is the best foundation for a healthy real estate market. With the combination of job growth and lower energy costs, I remain very optimistic as we enter 2015. For those who have been waiting on the sidelines, the current balance of stable prices and low rates represents a unique window of opportunity.
