Industry analysts and economists largely believe the real estate market will gain traction this year, but they acknowledge several challenges that pose a potential derailment to the ongoing recovery. CNNMoney recently highlighted several of those challenges:
Investors exit the market: Institutional investors accounted for 15 percent of all sales in October, a drop from 20 percent in January, according to National Association of REALTORS® housing data.
Lending criteria still tight. REALTORS® still say tight credit is holding many of their would-be buyers back and derailing transactions as buyers continue to struggle to qualify for a mortgage (although REALTORS® surveyed say they have seen a slight improvement in lending recently), according to the latest REALTOR® Confidence Index.
Rising mortgage rates: Mortgage rates are sitting near historical lows at the moment, under 4 percent for the 30-year fixed-rate mortgage, but don’t expect that to last. Many economists are predicting rates will push up to 5 percent by the end of this year.
Foreign buyers buying less in U.S.: Foreign buyers helped fuel the housing market recovery, but there are signs they’re presence is receding.For example, in California alone, sales to international clients has plunged about 25 percent in the past year, according to the California Association of REALTORS® (more: NAR’s 2014 Profile of International Home Buying Activity).
Source: “5 Biggest Threats to the Housing Market,” CNNMoney (Jan. 2, 2015)