Economists are predicting improving conditions for first-time home buyers in 2015, based on four important factors. Considering that rents are rising faster than incomes, it might just be cheaper to buy a home. It hasn’t escaped the notice of industry professionals and economists that first-time buyers are few and far between, which is something that needs to change.

As for the four trends, the first is looser lending standards. Fannie Mae and Freddie Mac put new lending guidelines in place in December, offering the option of a scant 3% down payment on mortgages to make things easier for first-time buyers to qualify for a mortgage. The strengthening job market should help move things along. New home sales are expected to climb by over 13% in 2015, according to the Mortgage Bankers Association. Existing home sales are expected to increase by 5%. As new home buyers get in the market, existing home owners will have an easier time selling their homes so they can upgrade to a more expensive home.

The second trend is a larger pool of homes to choose from because builders are marching forward with smaller home projects for entry-level buyers, according to Stan Humphries, chief economist of Zillow. Here in Hawaii, the trend may progress more slowly because the demand for more homes is so high.

The third trend is more affordable home prices. Because of the new homes being built to meet demand, prices are expected to ease up as supply increases. Some economists expect small gains in home prices as well, so don’t hold your breath on this one, especially here in Hawaii. On the plus side, fewer purchases are expected from big institutional investors. In the past, their activities helped drive up prices, so it will be ideal for first-time buyers if this prediction is accurate.

The fourth trend involves higher mortgage rates, which isn’t among the helpful changes, but analysts still feel that overall rates will be low, all things considered. In December, the Federal Reserve announced that it wouldn’t raise the Federal Funds rate until the summer of 2015 or later. Current mortgage rates are 4%, and predictions suggest a change to 4.5%, or 5% at the most.

If you need more advice on the real estate market with an emphasis on Maui’s conditions, you’ll find our contact information at the bottom of the page. We would be happy to assist you. Mahalo!