With millennials, forecast is for strong housing market

Kelcy Dolan
Posted 2/5/15

It may just be the time to buy a house.

The 2015 Re/Max of New England Housing Forecast Report, which looked at the housing market’s 2014 numbers to make projections for the following year, is …

This item is available in full to subscribers.

Please log in to continue

E-mail
Password
Log in

With millennials, forecast is for strong housing market

Posted

It may just be the time to buy a house.

The 2015 Re/Max of New England Housing Forecast Report, which looked at the housing market’s 2014 numbers to make projections for the following year, is optimistic about the housing market across New England for 2015.

According to the report, during the summer of 2014, with the economy improving and low interest rates across the board, buyers flocked to the market with restored confidence.

Rhode Island was no different.

In an interview last week, Michael Mita, principal owner of Re/Max Flagship in Narragansett, said the Rhode Island housing market did very well the second half of 2014 and he sees the trend continuing in 2015.

“If you’re thinking of making a move, do it now. Rates are historically low, but eventually they are going to have to go back up. You’ll never have as much buying power as you do right now,” he said.

According to the Rhode Island Realtors Association’s 3rd Quarter Single-Family Homes Comparison, although fewer homes sold in 2014 than 2013, the median price dropped $3,000 to $215,000; there were nearly 100 less distressed properties; and the average days on market dropped from 83 to 77.

In Warwick, housing sales went up, if just barely, from 321 up to 323 and the median price went from $175,000 to $170,000.

Mita said that a good portion of the market turnaround is the improving economy, which is leading people to get more jobs and being more confident in their purchasing power.

Buyers who have been “sitting on the sidelines” are finally ready to enter the market after watching a steady and healthy value rise over the last few years.

“Life demands change. After the housing market crash a lot of people put off buying a home or moving to a new one, and finally they are coming back out to the market,” Mita said.

Tiffany Gaffney, one of Mita’s customers who bought and sold in the Warwick area, waited nearly four years to sell her home. She and her husband had bought their first home in 2007 just before the market crash, but with four young boys the family was ready to upgrade.

Tiffany said, “It involved a lot of watching the market, not just the value of our own home but also the type of homes we were interested in buying. It took us four years from when we decided to buy a new house to finally do it. Values just kept going up and we said if we don’t move forward on this now we are going to lose the house.”

Although the housing market is improving, the atmosphere of the market has changed a lot.

“When we bought in 2007 we weren’t worried about the market, we weren’t at a risk to lose anything,” Tiffany said. “But seeing what has happened since the market crash and how it’s affected the people around us, we were much more cautious, especially because now we have four kids to worry about, too. Hearing that we would not be able to sell our home for what we bought it for was a hard pill to swallow, but there are two sides to the equation and what we lost in selling we made up in value of our new home, which was a steal.”

Banks are again loosening their loan requirements to help make buying a home possible for more people, especially those carrying student loan debt.

Also, no longer are buyers required to put 20 percent down, but it can be as little as 3.5 or 5 percent on a home, said Mita. Although this may appear to be following a trend similar to just before the market crash in 2008, Mita assures that it is not going to be the same.

“That is what got us in trouble back in 2008, but what is different is that there is no irresponsible underwriting this time. Banks are still more careful and responsible with who they issue loans to. They make sure debt is being properly handled and that people actually have the money to not only purchase a home but also live while making those mortgage payments,” Mita said.

Many buyers, just like Tiffany, are still very skeptical and careful when they are looking into purchasing a new home. None are more apprehensive than those in the millennial generation.

“Millennials came to the age of ownership just after the market crash; it was not a good time to buy and confidence was low. But now the economy is improving, more people have jobs and, like any generation, they are ready to buy. Unlike other generations though, millennials learned from this crisis. They are being much more strategic, more studied and cautious buyers.”

The Re/Max Forecast report said that these millennial buyers, although more apprehensive in their home search, will be many of the buyers this year and will play a big part in restoring the market.

Steve Harney, president and founder of Keeping Current Matters, a company that tracks real estate trends, said that after the crash, with no jobs available, many students went on to higher education and have finished up within the last few years, making them a huge opportunity for the housing market as they leave their educational careers.

Although they may be a big part of the market this year, Mita assures that it is a good time for anyone to buy, whether that’s families, like Tiffany’s, looking for a bigger home or couple’s looking for their first.

Tiffany, having just went through the process of selling and buying a home, cautions people to take their time when looking for a home.

She said, “In this market you have to take your time; it took us four years. People need to think long-term because gone are the days of short-term turnovers and making money off selling a home. You need a home to live in.”

The full forecast report can be found at www.remax-newengland.com.

Comments

No comments on this item Please log in to comment by clicking here