Stage is set for strong rise in housing growth

The key factors are now in place for exceptional growth in housing this year, it is reported by leading analysts and housing organizations.

The economy started the year on an upbeat note, and it's expected to continue to stay strong in 2015, led by a strengthening employment sector and rising income growth, according to Fannie Mae's Economic & Strategic Research Group.

That is all expected to translate into a drive in consumer spending and lift the pace of the housing recovery, Fannie Mae researchers note. The economy is predicted to see a 2.9 percent growth this year, up from a 2.5 percent growth in 2014, according to Fannie Mae's economic report.

"We expect housing to shift up a gear in 2015 following the uneven and ultimately disappointing activity last year," said Doug Duncan, Fannie Mae's chief economist, as quoted in a National Association of Realtors report.

"Our forecast calls for a number of factors, including strong hiring and income growth, stabilized housing affordability and modestly easing lending standards, to translate into improving housing demand throughout the year."

Fannie Mae economists are predicting home sales to rise by about 6 percent for 2015, and total single-family mortgage production to soar to about $1.2 trillion. The housing market will benefit as consumers get more upbeat about the economy and increase their spending, Duncan notes.

"Although we are beginning this year at a more modest pace compared to the above-trend numbers seen at mid-year 2014, the country's aggregate income has benefitted from the improving labor market," Duncan said.

Q. Are mortgage rates rising?

A. Yes. On March 12, Freddie Mac released the results of its Primary Mortgage Market Survey, showing average fixed mortgage rates moving higher amid a strong jobs report and bringing mortgage rates back to where they were at the start of 2015.

The 30-year fixed-rate mortgage has averaged below 4 percent since the week ending Nov. 13, 2014. Today, the 30-year fixed-rate mortgage averages 3.86 percent with an average 0.6 point.

Q. What is the average rate homeowners pay for property tax?

A. Homeowners pay their property tax at varying rates in different markets throughout the country. And, strangely, the highest rates are for very high-end and low-end homes.

That was revealed in a recent study and report by RealtyTrac, a source for property information.

Nationwide, the average effective property tax rate for all single-family homes in 2014, was 1.29 percent, but the average effective property tax rate was 1.68 percent for homes valued $50,000 or below and 1.40 percent on homes valued between $50,000 and $100,000.

Meanwhile, the average effective property tax rate was 1.56 percent on homes valued $1 million to $2 million and 1.77 percent for homes valued $2 million to $5 million, the report noted.

It also found that homeowners who have owned 5 to 15 years had the highest effective property tax rates while those who have owned more than 20 years had the lowest effective property tax rates. The average effective property tax rate was 1.35 percent for homeowners who have owned between 10 and 15 years, and it was 1.34 percent for homeowners who have owned between 5 and 10 years.

Meanwhile, the average effective property tax rate was 1.18 percent for homeowners who have owned less than 1 year, and it was 1.15 percent for homeowners who have owned more than 20 years.

Q. Are more singles becoming homeowners?

A. Yes. In fact, there are more singles, generally. Single Americans now make up more than half of the adult population, it was reported by the National Association of Realtors.

About 124.6 million Americans indicated they were single. About 50 percent were age 16 or older, according to new data from the Bureau of Labor Statistics. The percentage has been gradually trending upward since the beginning of 2013.

The top five markets where singles dominate the housing market are Gainesville, Fla.: 67 percent (the percentage of singles); Richmond, Va.: 62 percent; Boston, Mass.: 62 percent; Washington, D.C.: 62 percent and Berkeley, Calif.: 62 percent.

• Email Jim Woodard at storyjim@aol.com.

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