According to a recent article on cnbc.com, 2015 just might be a breakout year for real estate. While we’ve certainly had our fair share of “breakout” real estate values over the years, new federal regulations have essentially eliminated the bad mortgage programs and shady lenders and the predictions for 2015 don’t expect any sort of bubble. No, the real estate market will be driven by solid fundamentals, with a dash or two of foreign markets.
The reasons for the predictions of a possible rosy 2015 housing market points to the current activity in equities. Over the past few weeks, both the Dow and S&P 500 have hit records with occasional profit-taking but investors have noted the GDP is up substantially for the two previous quarters, corporate earnings are strong in most sectors and new jobs being created at a 300,000-plus clip are sure signs of a strengthening economy. And what about our friends overseas?
Well, whether they’re considered friends or not, at least they’re economies independent of ours. The Euro is weakening, Japan is in a recession as is Russia. Russia is especially a problem as much of their economy is driven by the export of oil. When oil falls as much as it has, Russia can’t sell enough oil to cover its obligations. Yes, oil falling here in the State will have an impact in the oil sector and certain states will be harmed more than others, but our economy isn’t solely dependent upon oil. Investors like to put their funds where they feel they’ll grow, not shrink and what better place in the world right now than here in the good ol’ USA?
Bonds, including mortgage bonds, are a very safe place for investors around the globe. The yields aren’t that spectacular but they’re predictable as well as secure. And as more investors buy bonds, the price goes up which results in lower rates overall. There, you have it. A rebounding economy and continued low rates. That’s why housing is predicted to be a major, positive player in the coming year.