Home prices have gradually increased this year, and while that trend is expected to continue into the first of the year, Capital Economics has stated that home price gains will begin to level out. Experts believe that as we progress into 2015, price gains will average around 4%. Supply is expected to increase helping home price growth become more stable in the coming year. Experts are also expecting interest rates to jump. Paul Diggle, a property economist for Capital Economics said, “a March rate hike is not out of the question. Thereafter, we expect the Fed to continue raising rates more aggressively than the markets expect, with the Fed funds rate reaching 3% by the end of 2016. In turn, that means that 30-year mortgage rates will increase from 4.1% now to 5.5% by the end of 2015 and 5.8% by the end of 2016. Housing affordability will deteriorate, but even by end-2016 affordability will be more favorable than the historical norm.” More here
