According to recent reports, 2015 has the potential to support home buyer demand with its strong housing recovery. And, the Midwest is leading the trend in balancing the market demand among all housing segments.
The low-tier price segment of homes, which was once driven by investors, is key for first-time home buyers. The good news: this low-tier market has sustained national price growth. In addition, move-up buyers are seeing some relief from negative equity in their homes with the rise of home prices.
With that gain in home equity, mid-tier homeowners may decide to move up, therefore driving demand in the low and mid tiers of the housing market. That said, the top tier rate of appreciation is stalling; while the low tier is continuing to see double digit gains year-over-year at 10.2 percent. The divide between the healthy low tier and the stagnant top tier could allow traditional buyers a moment to see equity in their homes. This equity may motivate potential move-up buyers to enter the top-tier segment of the housing market; seeing stalled top tier prices as a good deal. In direct correlation, it opens up more opportunity for low-tier homeowners to move up to the mid tier.
At the same time, these moves up provide new inventory for potential first-time buyers to enter the housing market. This domino effect could allow balanced demand across all sectors of the housing market this year.
Across the nation, we lead the pack in the Midwest with double digit year-over-year gains in the low tier at 13.6 percent and a 3.3 percent drop in the top tier. The Midwest led the nation in the all tier segment and is the only region currently seeing price appreciation in the low and mid tiers. These numbers could be the indicator that the Midwest will be the first region to realize full buyer momentum across all segments of the housing market. So, if you’re considering buying a new home, or a home for the first time, this year may just be “the” year for you.