Financial pundits on television and at the influential blogs often sum up the state of the market by comparing average rental prices with average mortgage payments. When it’s cheaper to rent than to buy, the housing market is usually in the midst of a sluggish period.
When it costs less to buy, the real estate sector is likely in a state of robust health. So, what’s the situation right now, as we are knee-deep in 2015 market trends? The Fiscal Times, one of the leading financial publications, reveals two key trends that point toward a dynamic year for anyone who is looking to buy a home.
Rental expense and credit availability
Two important forces are now aligned to boost the housing market and make buying a home a much better option than renting. U.S. renters are currently spending about 30 percent of their total income on housing expense, while homeowners spend just half that amount to have a roof over their heads.
The second part of the double-whammy, particularly for younger or first-time buyers, is the fact that it is now relatively easier to get a mortgage than it has been in several years. Thanks to a trio of government agencies (Fannie Mae, Freddie Mac and the Federal Housing Finance Agency), buyers will be spending less on down payments and mortgage insurance in 2015.
Some other trends to watch
Here are a few other real estate-related trends that home shoppers should keep an eye on, according to The Fiscal Times:
- Foreclosure rates are returning to normal
- Mortgage interest rates are still at historically low levels
- The average size of a new home is 2,000 square feet. That’s down from about 2,220 square feet in 2011.
All the current trends point toward one thing: if you are in the process of looking for a home, the winds of history are at your back, for the time being at least! Amid this favorable environment, buyers will still need to monitor their credit scores, sock away down-payment cash and work with an experienced real estate professional to get the best deals.
It’s still too early to tell, but 2015 could go down in history as “the year the housing market came back.”