2014 Housing Review: Who Was Smarter?

Last year, we got predictions from Wall Street experts and people on Main Street about what was going to happen to the stock market, oil prices, and housing prices.

So who was smarter, the experts, or people on the street. Let's see who was right…

In our next video report, we'll take a look at what the experts and people on the street think housing, stocks and oil will look like next year when we look back at 2015.
In the meantime, remember we not only update our site here on a regular basis, but we also post daily to Twitter and Facebook as well. We'd love to have you find and follow us there for more Long Island NY housing news.

What Prevents Millennials from Buying Long Island NY Homes?

When it comes to buying Long Island NY homes, first-time buyers, the millennial generation, falls under the "prime" home buying demographic. Unfortunately, many millennials also fall into another, less desirable, category: adult children. An adult child is a term that's caught on recently, and simply refers to adults roughly between ages 18 and 30 who still live at home with their parents, or are still dependent on their parents for their living arrangements.

When it comes to buying Long Island NY homes, first-time buyers, the millennial generation, falls under the prime home buying demographic

Homeownership among prime home buyers has dropped 11% from 1980 to 2012. Some would argue the statistics are skewed, because many 19-24 year olds are still in school and not financially able to live on their own – but that's not the point. Many adults who fall into that 18-30-year-old range are considered prime candidates for homeownership, yet over 50% choose to live with their parents or rent. Ideally they should be buying. What's holding them back?

Problems Keeping Millennials From Buying Long Island NY Homes

Jobs – Even with talk of the job market turning around, there are still over 9 million people unemployed. This leads to more young adults either struggling to find jobs, or taking part-time jobs with less pay. Either situation makes it much harder to save up for buying Long Island NY homes.

Debt – If you don't have that job, saving becomes very difficult, if not impossible. But it's even harder when there's student loan debt piling up on top of everything else. According to CNN, the average student's post-college debt is anywhere from $25,000 to $29,000. This becomes a huge problem when trying to save for buying a Long Island NY home. One of the main factors of being a prime home buyer is also having a college education, which is associated with higher income and, unfortunately, student loan debt.

Lifestyle – Low employment and high student loan debt numbers are forcing millennials to make lifestyle changes as well. CNN projects the millennial generation to have the lowest rates of marriage by age 40 compared to any generation. This is important because marriage and family tend to need larger living space. The two points above (employment and debt) have a huge impact on that, too.

This is where millennials really need to step it up. The job market does show signs of recovering over the next couple of years and, hopefully, millennials will find more opportunities for buying Long Island NY homes.

Until it does, millennials who have goals of homeownership, should try and save whatever money they can. It's important for them to start building up credit by paying off loans and being on time with payments. Even if millennials continue to live at home, those two takeaways are a step in the right direction, and will help them be able to eventually buy homes.

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Long Island NY New Homes: Market Looking to Recover

The Long Island NY new homes market was a bit on the sluggish side overall in 2014, but some analysts look for things to turn around in the next 2 to 3 years.

Some blame the overall slow comeback on builders who are reluctant to move very far outside of their familiar markets into more peripheral areas as well as their refusing to cut prices.

The Long Island NY new homes market is looking to recover from a sluggish 2014

Long Island NY New Homes Cost Much More

Buyers who purchase Long Island NY new homes are paying much more than those who buy existing Long Island NY homes. The price gap between the two types of homes, which historically has been in the 15 percent to 20 percent range, has ballooned to between 30 percent and 40 percent in recent years, according to data from the National Association of Realtors.

Construction of Long Island NY new homes have been at low levels the last few years. Single-family housing starts nationwide this year reached 650,000, but a more normal rate for the sector is considered to be 1 million. A shortage of new-home construction is putting higher premiums on Long Island NY new homes as well as those in other areas nationwide.

Underproduction of Long Island NY new homes is one key reason for pushing up prices, and that price premium could widen even more if housing starts don't rebound soon. On a national level, NAR projects single-family housing starts to rise to 820,000 in 2015, which is still under the historical average.

We'll keep an eye on this trend for Long Island NY new homes and keep you informed on how builder sentiment and reluctance to lower prices affects the market as we move forward through 2015.

Don't forget, we also post tips and news about Long Island NY real estate and other general real estate news daily at Twitter and Facebook.  Be sure to follow us there.

Long Island NY Housing Market: 3 Biggest Threats

A lot of housing experts and economists are expecting the Long Island NY housing market recovery to gain steam in the new year. But three big factors could still derail the whole ball of wax!

The Long Island NY housing market faces 3 very real threats in 2015.

Biggest Threats to the Long Island NY Housing Market

1. Incomes Not Keeping Pace – Despite a much rosier outlook for jobs, incomes are still not keeping pace with Long Island NY housing market prices. And that could make it hard for buyers to afford homes in the areas they want to live in. Income is not rising fast enough and affordability is a growing obstacle to homeownership.

2. Lenders Too Skittish – Mark Zandi of Moody's Analytics says, the key risk to the Long Island NY housing market recovery is still the difficulty many potential homebuyers have getting mortgages.

Even though Fannie Mae and Freddie Mac recently eased lending standards, it doesn't mean lenders are going to take it easier on borrowers. In fact, many lenders may still be too nervous to lend to borrowers who don't have near perfect credit or large cash down payments.

In addition, former homeowners who lost their home to foreclosure may have to overcome damaged credit histories financial burdens brought on by the recession. Meanwhile, Millennials who might be looking to buy have short-lived credit histories and heavy debt loads from student loans to contend with.

3. Sharp Increase in Mortgage Rates – While Fannie Mae doesn't expect to see a sharp jump in mortgage rates, the Federal Reserve could surprise everyone and send its benchmark rate higher than it's projecting.

The Fed is uncharted territory, and if it pushes rates up, it could have a big impact on the market.

Stan Humphries, chief economist for Zillow, said if rates climbed to 6%, it would mean home buyers in some markets like the Long Island NY housing market would be spending more than half of their income for housing.

That would probably mean home prices would have to come down to more affordable levels or sales would slow to a crawl.

Other factors not even part of our 3 biggest threats to the Long Island NY housing market include foreign buyers and investors. What happens if they all stop buying, which is starting to happen in some parts of the country.

Stay tuned, we'll keep you updated on Long Island NY real estate throughout the coming year. Find more Long Island NY housing market news to your right under our Long Island NY Real Estate Categories. And don't forget, we post daily tips on Facebook and Twitter. Be sure to check us out there as well.

2015 Long Island NY Housing Outlook

2014 was an encouraging year for the Long Island NY housing sector. Housing nationwide found itself on a bit of a roller coaster.

2014 kicked off with the "Polar Vortex" blamed for slowing home sales in the early part of the year. As we close the door on 2014, the National Association of Realtors says sales of previously owned homes fell short of 2013's total, while the latest monthly data on new homes show sales were up just 1.8% from a year earlier. Meanwhile, price gains for previously owned homes have slowed significantly. Still, builder confidence in the market for newly constructed, single-family homes has been high for six straight months.

Economists say the Long Island NY housing market is showing mixed signals because it's normalizing, leveling off after a much more rapid recovery last year that was simply unsustainable.

What does Long Island NY housing look like for 2015 compared to 2014?

What to Expect for Long Island NY Housing in 2015

Long Island NY home prices didn't increase as fast in 2014, and they are expected to stick to that trend into the new year. Easing housing inventory levels and the exit of investors from the market are helping to put the brakes on home-price escalation. This change represents a fundamental shift in the market: We seem to have moved out of the rapid recovery phase and into a new normal. Gone are the double-digit gains of 2013. The National Association of Realtors predicts an annual gain in home prices of 4 to 5 percent in 2015.

The home buying process should get a little less hectic in 2015, thanks to eased inventory and credit plus the exit of investors from the Long Island NY housing market. Since the recovery began in earnest in late 2012, buyers have really taken it on the chin, forced to contend with low inventory, tight credit, bidding wars and intense competition from investors and all-cash buyers.

Mortgage Rates Seen Rising in 2015

The Mortgage Bankers' Association predicts that rates will rise to 5% by the end of 2015; Freddie Mac's chief economist Frank Nofthaft expects a more cautious average of 4.5% in 2015. The MBA says there is plenty of reason to believe a short-term fund rate hike could come by mid-2015, pushing mortgage interest rates up with it. Still, last year economists predicted that mortgage interest rates would hit 5% by the end of 2014—and yet the average rate for a conventional 30-year, fixed-rate mortgage stood at just 3.93% last week, compared to 4.42% one year earlier. For most of 2014 interest rates were flat or declined. A great reminder that economists can make their predictions, but we wouldn't recommend anyone bet the farm on their forecasts.

Rents likely will continue to keep rising in the new year, and many housing analysts predict that an increase in rental costs in 2015 will outpace annual home-price gains. The rental market will likely remain a “landlord’s market” in 2015, with vacancy rates expected to stay below 5 percent in the new year.

Long Island NY Housing Likely to See More Sellers

More people are expected to try to sell their homes in 2015 (and Realtor.com predicts that existing, or previously owned, home sales will grow 8% in 2015). The entry of these previously owned homes onto the Long Island NY housing market could suppress the demand for more expensive newly constructed homes. Many Millennials forming their own households will need to save for a down payment before buying, so they'll rent instead of buying new homes. The vacancy rate for single-family homes is still near its recession high, which is likely to further depress construction of new single-family homes. So builders will continue to meet the demand for apartments–and multifamily housing could have another strong year, and builders are expected to shift to building less expensive homes.

Foreclosure filings have been on the decline this year and are expected to continue their descent well into 2015. The only uptick has been in foreclosure auctions, which are up 5 percent in November compared to one year earlier. Foreclosures will likely fall to pre-crisis levels in 2015.

The Long Island NY housing market is expected to be driven more by underlying economic fundamentals–job growth, incomes, household formation–than by macro-economic factors such as national price crashes. Mortgage interest rates and price recovery have driven the Long Island NY housing market for a long time. Now we're seeing that those factors aren't nearly as important as local economics.

Stay tuned as we wait to see how many of the 2015 Long Island NY housing market predictions actually come true, and how many of them we'll be looking at this time next year and saying, "Don't believe everything you hear from economic forecasters."

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