In our last video report, we took a look at how Wall Street experts and people on Main Street fared in 2014 when it came to predicting what was going to happen to the stock market, oil prices, and housing prices. In this report, let's see what the experts and a few people on the street think will happen to Long Island NY housing, oil and the stock market, in 2015…
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…
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 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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The burden of Long Island NY household costs fell for the third consecutive year, according to the U.S. Census’ 2013 American Community Survey. Nationwide last year, 39.6 million households spent more than 30 percent of their income on housing, which is a decrease from 40.9 million in 2012 and down from the peak of 42.7 million in 2010.
Long Island NY household costs are mostly dropping among home owners, while they continue to strain renters, according to a recent analysis by the Harvard Joint Center for Housing Studies of the data. In 2013, 26 percent of home owners were considered burdened by household expenses (i.e.: spending more than 30 percent of their income on housing), compared to half of all renters at 49 percent.
Why Long Island NY Household Costs Are Escalating For Renters
The number of renter households is on the rise, which partially explains why Long Island NY household costs for renters are escalating. But renters are also plagued by rising rents that are not matching incomes. Median renter costs were up about 5 percent in 2013 compared to 2001, even though median incomes were nearly 11 percent lower, according to the report.
This has led to more renters being severely burdened by Long Island NY household costs in 2013, paying more than 50 percent of their incomes toward housing costs. 11.2 million renters were in this category.
The number of home owners burdened with higher Long Island NY household costs is dropping. After surging during the housing bubble, inflation-adjusted owner costs have dropped about 2.5 percent below their 2001 level. Owner burdens are also down due to a significant reduction in the overall number of home owners in 2013 than 2012. This decline in the number of home owners for the third straight year suggests that many burdened owners dropped out of ownership, moving into the costly rental market.
Get more timely information about Long Island NY household costs and news affecting those costs in our section on Long Island NY Real Estate News to the right under Long Island NY Real Estate Categories.
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