5 Economic Questions for 2015

There are many things that could change in a year, and it’s especially beneficial to anticipate any changes that could go on in the market. So, to prepare yourself for the rest of 2015, educate yourself on these 5 questions and see how they could pertain to you, and what possible effects they may have on your life.

1. How much will Residential Investment increase?

Through February, starts were up 8% year-over-year when compared to the same period back during last year. It looks like there will be a growth of 8% – 12% for both, new home sales, and housing starts. There may also be a shift leaning more towards single-family starts, rather than multi-family starts.

2. How much will housing inventory increase?

I believe active inventory will increase further in the year, and move closer to 6 months supply this summer. Although December and January are seasonal for decline, I expect inventory up again year-over-year in 2015.

3. What can we expect about oil prices for the rest of the year?

It is IMPOSSIBLE to predict an international supply disruption, however, if a substantial disruption occurs, then prices will obviously move higher. Although continued weakness in Europe and China does seem likely, I think the continuation to produce, at most, existing wells at current prices (WTI at $55 per barrel). This suggests that prices will stay below $100 per barrel for the rest of 2015, which is a positive for the US economy.

4. Will real wages increase?

The more the labor market tightens, the more companies will be under wage pressure to compete for employees. However, the key question is whether real wages start to pick up in 2015, or later on. On the other hand, I do expect to see somewhat of an increase in both real and nominal wages, but nothing to significant. Through March, nominal hourly wages were up 2.1% year-over-year, so this is some evidence that wages will pick up.

5. What will the unemployment rate be by December?

Although it depends on the estimate for both participation and job growth rate, it seems that the unemployment rate will decline close to 5% by December 2015, because of the relatively steady participation rate. If the participation rate increases a little though, then I’d expect unemployment in the low-to-mid 5% range.

All blog information is of the opinion of the Loan Officer and is not supported by Fairway Independent Mortgage Corporation

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