Increasingly confident renter households will enter the homebuying market after watching rental growth rates hit a seven-year high. And households that were forced into foreclosure or a short sale during the housing crisis several years ago could begin streaming back to the market, too.
Sales will be bolstered by the expected return of more reasonable mortgage underwriting standards that were in place prior to the housing boom. This shift by lenders will help soften the impact of gradually rising interest rates, which NAR expects to top out just below 5 percent this year. If interest rates defy expectations and remain close to where they are currently, this will be another boost to housing sales, says NAR Chief Economist Lawrence Yun.
On the commercial side, continued modest improvement in vacancies, absorption rates, and rent growth is projected for all the major sectors in 2015.
The big unknown for real estate is the health of the global economy. If the economies of Europe and other powerhouses continue to lag, further U.S. growth could be stymied, slowing the expansion of residential and commercial markets.
| 2014 | 2015 | 2016 | |
| Forecast | |||
| GDP growth | 2.2% | 2.7% | 2.9% |
| Existing-home sales (millions) | 4.90 | 5.30 | 5.40 |
| New-home sales (units) | 440,000 | 620,000 | 700,000 |
| Housing starts (units) | 1,000,000 | 1,300,000 | 1,400,000 |
| Home price (median) | $ 207,600 | $ 215,900 | $ 225,300 |
| Fed funds rate | 0.1% | 0.4% | 1.6% |
| 30-year mortgage | 4.2% | 4.9% | 6.0% |
| Commercial | |||
| Office | |||
| Vacancy rate | 16.2% | 15.7% | 15.6% |
| Net absorption (sq. ft.) | 35,586 | 48,841 | 55,026 |
| Completions (sq. ft.) | 27,073 | 42,154 | 44,460 |
| Rent growth | 2.6% | 3.3% | 3.6% |
| Industrial | |||
| Vacancy rate | 8.9% | 8.5% | 8.1% |
| Net absorption (sq. ft.) | 110,652 | 102,463 | 105,780 |
| Completions (sq. ft.) | 81,009 | 71,349 | 62,097 |
| Rent growth | 2.4% | 2.9% | 3.1% |
| Retail | |||
| Vacancy rate | 9.8% | 9.6% | 9.4% |
| Net absorption (sq. ft.) | 11,350 | 18,871 | 23,792 |
| Completions (sq. ft.) | 7,747 | 11,711 | 15,924 |
| Rent growth | 2.0% | 2.5% | 3.0% |
| Multifamily | |||
| Vacancy rate | 4.0% | 4.1% | 4.2% |
| Net absorption (units) | 216,296 | 171,167 | 143,626 |
| Completions (units) | 180,796 | 210,669 | 165,339 |
| Rent growth | 4.0% | 3.9% | 3.5% |
| All tables use data compiled by NAR Research. Figures for 2007–2013 are actual; figures for 2014–2016 are projected. |
|||
|
|
|||
| Wealth Gap | |||
| Household Wealth: Owners vs. Renters | |||
| Owners | Renters | Difference | |
| 1998 | $132,100 | $4,200 | 31x |
| 2001 | $172,600 | $4,800 | 36x |
| 2004 | $184,700 | $4,000 | 46x |
| 2007 | $234,800 | $5,100 | 46x |
| 2010 | $174,500 | $5,100 | 34x |
| 2013 | $195,400 | $5,400 | 36x |
| Source: Federal Reserve Survey of Consumer Finances | |||
|
|
|||
| Steady Gains | |
| (existing-home sales) | |
| 2009 | 3,820,000 |
| 2010 | 4,190,000 |
| 2011 | 4,260,000 |
| 2012 | 4,660,000 |
| 2013 | 5,090,000 |
| 2014 | 4,937,000 |
| 2015 | 5,295,000 |
| 2016 | 5,380,000 |
| Source: NAR | |
|
|
|
| Profitability Expected | |||
| Expectations over the next 12 months (percentage of firms) | |||
| Less | Same | More | |
| Residential Firm | 8 | 26 | 66 |
| Commercial Firm | 6 | 23 | 71 |
| Source: NAR | |||
|
|
|||
| Want to Buy | |
| Gen Y attitudes on home ownership | |
| Home ownership is an important long-term goal | 75% |
| Home ownership is an excellent investment | 73% |
| Among renters, belief owning a home makes more sense | 59% |
| Among renters, belief it’s difficult to get mortgage | 73% |
| Source: Fannie Mae, 2013 Demand Institute Housing and Community Survey | |
|
(c) Copyrighted and Reprinted with permission by the National Association of REALTORS. Written by Robert Freedman is the director of multimedia communications at NAR. He can be contacted at rfreedman@realtors.org. |
|