New Year, New Home: Why 2015 Is Poised to Attract First-Time Buyers

New Year, New Home: Why 2015 Is Poised to Attract First-Time Buyers

For years, we’ve been hearing about the marked absence of first-time homebuyers from the market.

Millennials, in particular, have faced significant barriers to homeownership, including strict lending requirements and unaffordable prices.

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But experts point to a number of economic factors that suggest 2015 could be the year first-time buyers re-enter the housing scene.

Read on for CNNMoney’s roundup of four trends that could finally give newbies a leg up.

1. Getting a Mortgage Will Be Easier

Earlier this month, lenders Fannie Mae and Freddie Mac announced they would begin backing mortgages with down payments of just 3%. That’s especially important for young buyers, since research suggests it could take them more than a decade to save up the traditional 20% needed for a down payment.

2. Buyers Will Have a Bigger Selection

In anticipation of an influx of new homebuyers, builders, including LGI Homes and KB Homes, are constructing smaller homes that may appeal to them more. For example, homebuilder D.R. Horton recently launched a company called Express Homes to build homes that cost between $120,000 and $150,000—about half the price of a typical home they build.

3. Prices Are No Longer Skyrocketing

As the supply of available homes increases, prices are expected to climb at a slower pace. That could mean big relief for potential buyers in typically pricey areas, like Washington, D.C. and San Jose, Calif.

4. Mortgage Rates Are Staying Low

While experts predict mortgage rates will rise in 2015, that may not happen for a while. In December, the Federal Reserve indicated that it wouldn’t increase interest rates until summer or later. Even then, mortgage rates probably won’t top 5%, which is still lower than average.

Curious to know more about what 2015 has in store for homebuyers? Check out our list of five trends likely to alter the market next year.

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