Springtime could bring a homebuying boom

The housing market has seen steady, volatile and slow periods in the last couple of years, but some experts believe the U.S. could see a boost in home sales to first-time homebuyers this spring, Fortune reported.

However, on the other side of things, some real estate professionals are still hesitant to say the market will see a healthy shift this spring. According to the National Association of Realtors, some experts tend to put too much investment on the first of the year sales.

"January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows," said Lawrence Yun, chief economist for the National Association of Realtors.

Beating the millennial impressions
One of the major reasons why this spring could be a booming time of the year for the housing market is the presence of millennials. According to a press release from Zillow, millennials (those under 35 years old) will be the largest homebuying group in the nation. However, many experts want to typecast this group as a city-loving, rent-only and noncommittal generation. According to Fortune, millennials actually want to look into buying a home because the price of rent is starting to be much higher than home prices in many regions across the nation.

As rent prices continue to soar in major metropolitan areas, the idea of owning a home is more prosperous for millennials. Additionally, many typical impressions of millennials have them as a financially lacking group of people. In fact, their generation is one of the highest-employed groups for college-educated people, the source reported.

Millennials could break many impressions given to them about their homebuying habits this spring.
Millennials could break many impressions about their homebuying habits this spring.

Gas prices and the economy
Another reason spring could bring a shift toward a homebuying splurge is the state of the economy and low winter gas prices. Potential homeowners have been able to save dramatically over winter, with fuel prices reaching some of their lowest levels in years. According to ABC affiliate WCVB based in Boston, the oversupply of fuel will likely keep gas prices at lower levels through spring, which means more money in the pockets of first time home owners.

The strong economy helps first-time homebuyers make the final decision to purchase a new home. Additionally, many people in the country don't see a dead end to the well-off economy, which means younger renters are growing to the idea of making the move toward purchasing a home, the source reported.

"With the improving economy, we will see more people leaving their parents' homes," said Yun, according to U.S. News and World Report. "Living in your parents' basement isn't part of the American dream. Nearly 3 million new jobs were created in the last 12 months, and that provides incomes for families and confidence for making long-term decisions."

Increasing mortgage rates
Several economists and real estate experts have predicted mortgage rates will rise in the near future. Recently, the Mortgage Bankers' Association and Bank Rate estimated rates would rise to 15 percent by December but not go over that mark.

With the impending mortgage rate likely to increase, many potential homebuyers are making the decision to buy in fear of missing out on a great mortgage rate, Fortune reported. Last year, the MBA predicted the mortgage rates would rise to 5 percent as well. However, in the last week of December 2014, the rate was sitting at just 3.93 percent for a 30-year fixed mortgage, Forbes reported.

While the experts continue to predict an increase, the thought of missing out on a lower rate could still push more buyers this spring.

For more information about your home loan options, contact Landmark Bank.

Back to Blog