Jeff Sposito: I think we’ll see inventory increase in 2015, but only slightly. Investors are purchasing properties for rental as opposed to flipping. As D.B. says, many sellers are holding off putting homes on the market because they are fearful of not having a place to go.
Tom Woiwode: In our area, lot prices remain a relative bargain and builders are taking advantage of this. We have some hot areas poised for growth, and being a coastal region, we only have one direction to grow. We have seen a tightening of inventory, and I expect this trend to continue. I believe it will remain a good time to sell, and a good time to buy.
Rick Davidson: This is a supply-and-demand business. If demand continues and prices continue to increase, there will be more opportunities to get into the move-up market, which will bring additional homes to market. Also, as prices continue to increase, more homes will come out from underwater. So, with continued demand, new construction and more homes out from underwater, we will continue to see improving inventory.
Jeff Detwiler: I don’t think inventory is a problem in our marketplace. There’s a lot of conversation about the dynamics of home prices and, like Rick, I’m just a simple supply/demand kind of person. Prices escalated significantly because of the shortness in supply, and as those price escalations level off, some of those causes of shortness in supply eased up.
Christy Budnick: Inventory in our area depends upon the price point. In the low price points, $250,000 and under, there is a little less than four months of inventory, so we’re on the edge of low. Anything above $250,000, we have a nice inventory right around 4.5 – 6 months.
MP: Do you think we’ll start to see lending standards loosen up? Why or why not?
Rick Davidson: A lot of mortgage providers saw a significant downturn in the refi business and are looking today at the need to expand the credit box in order to pick up the business in purchase money. Given the demand in the marketplace, along with the need for lenders to place mortgages, lenders will need to look at ways they can loosen their own credit standards. This comes on the heels of the FDIC finalizing the definition of the QRM and QM. Those actions should provide lenders with the framework they need to provide consistent standards. The uncertainty of the definition was forcing lenders to lend to the highest standard in the market.
Jeff Detwiler: I also think there will be a little loosening of some of the various credit aspects next year. We’re already seeing Fannie and Freddie make those moves. There is a groundswell of conversation around unintended consequences. We need to bring the credit pendulum back into balance.
D.B. Wilson: We have not seen many transactions fail due to denial of credit to the buyer, though we read that it is happening often on a national basis. I do believe that there has been an overcorrection to the very easy credit from before the bubble that led to our nightmare, so I think a loosening of standards would be smart and practical.
MP: What demographic groups will play an important role in your business next year?
Sherry Chris: All demographic groups play an important role in our business, and will continue to, as millennials are more ethnically diverse than any other previous generation. Our role as a brand is to educate not only our network, but the industry as a whole, on the unique traits of various consumer sets to ensure we are best serving today’s and tomorrow’s consumer. We believe it is vital to align ourselves with key diversity organizations such as NAHREP, AREAA and NAGLREP to educate and to be educated as we work to adapt the real estate industry to meet the evolving needs of the consumer.
Jeff Sposito: Foreign buyers will play a big role in the market in 2015, particularly Asian and Indian consumers. We also believe the boomers will be a significant group in the market next year.
Tom Woiwode: I agree. With home prices improving, many homeowners of the boomer generation are seeing a rebuilding of the equity they had lost, and now find themselves no longer being stuck in an equity trap. They can now sell their homes and move the equity to a new home.
Rick Davidson: We will continue to see growing demand both within the Latino market, as well as the Asian American market. There are 53 million Hispanic Americans, and that demographic is 10 years younger than the overall age of the American population. These are people who are aspiring to be homeowners, who value family and value the dream of homeownership. According to NAR, in the year ending in March 2014, $92.2 billion worth of real estate in the U.S. went to investors outside of the U.S. That represents a 35 percent increase over 2013. We believe there will continue to be a great demand for real estate in the U.S. in the international marketplace.
MP: What market segments and trends will help boost business next year?
Christy Budnick: Luxury has picked up for us, increasing substantially, both in units and volume, and we will continue to see an increase next year. Also, in the last 18 months, homebuilders are back in the market—not just the big, national builders, but smaller, custom builders as well. I expect to see even more of that. We also expect relocation to be strong. We were just awarded a nice group move with GE.