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Why the Real Estate market will remain strong

The Mortgage Banking Association expects the housing market to stay strong for at least the next five years and maybe even longer.

The Federal Reserve Board may boost the short-term federal funds rate one more time this year and three times next year. But the long terms rates may not rise too much higher.

Rates will be low enough to enable home prices to increase steadily. Driving these gains is a more sustainable rate of job growth, wage growth that is trending higher and a generation of young adults that is more than likely to buy houses.


There is though one thing to worry about: that the spread between BBB corporate bonds and the 10-year Treasury yield will increase: housing won’t cause a recession but this might.

We may expect job growth to decrease. But job openings are currently at a record high of 7.1 million, largely because businesses can’t find the trained workers they need. The unemployment rate, meanwhile, is at the lowest point since 1969. And the economist expects it to fall a bit further.

At the same time, both wage growth and median household incomes are trending higher. Moreover, millennials are at the edge of reaching their prime home buying years (25 to 40). S

Actually, the number of first-time buyers is already rising!

Demand is there, mortgage rates will go up but not too much and the economy is strong.

A few other key favorable trends:

·         The number of houses selling above list price is slowing, with many more houses now selling below their asking price. 

·         Slowing appreciation is another sign of moderating house prices. 

·         Origination of purchase money loans may rise steadily through the next three years.





By Caroline Germano - Oct 31, 2018

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