Mortgage Blog

Home Purchase: A Sound Investment?

Personal Finance

According to Wells Fargo Economics Group, housing activity has increased in 2015. In the first four months of the year, home purchase and new home sales are 22.4% ahead of the pace than they were a year ago. Not to mention, the price activity is certainly much different than it was five years ago.

Pending home sales are up 14% from last year. This suggests 2015 will be the best year for housing since the recession. Existing home sales have been more volatile, due to a lack of inventory. Inventory has remained small due to homeowners unwilling to sell, and many owners believe they may not qualify for a new loan.

We are also seeing rental homes playing a larger role in the market. Many potential borrowers have turned towards renting homes rather than buying. This current environment has reduced vacancy rates and increased rents, resulting in few investors wanting to sell their properties. Many homeowners are also keeping their currents homes, rather than downsizing after their children move out.

The National Association of Realtors found 40% of the homes sold in April sold at or above the asking price. New home sales increased 6.8% in April but remain low. Purchase applications have also seen a 13.1% increase from a year earlier. Although a rate hike is expected soon, higher rates shouldn’t prevent new buyers from entering the market.  Back in April, first-time home buyers accounted for 30% of the market, but home prices are now increasing at more than double the rate of wages and salaries.