The confidence of consumers during the 2nd half of 2014 has rebounded thanks in part to a rise in the U.S. GDP. In fact, it’s causing what economists have termed the “virtuous cycle.” The good news is that this boost in confidence will trickle down to the housing market heading into 2015.
The “virtuous cycle” begins with job market gains showing total non-farm payrolls steadily increasing since 2009 while initial jobless claims continue to fall.
This, in turn, is boosting household finances—with average hourly earnings rising and debt payments dropping. The growth in household income is helping to drive consumer spending and fueling progress in the housing market.
With household finances improving and mortgage interest rates currently under 4%, many buyers have a little more wiggle room for spending. Especially when you factor in that home price values are declining in most of Southern California. For instance, the average home price in Orange County dropped -0.4%—from $692,390 in October to $689,480 in November.
While no one can predict just how long the “virtuous cycle” will continue, one thing is for certain: The housing market is heading into 2015 on the right foot for a prosperous year.