Mortgage rates are at a historic low. Even with Feds looking at raising rates, it may still be favorable for a while. This make it easier for would be home buyers to get into a home with an affordable mortgage. Some say low interest rates are not without its pitfalls.
Low rates make the monthly mortgage somewhat lower. The unintended consequence of that is more and more home buyers are looking for larger and expensive homes that will fit into their budget at this time. Unfortunately it is an artificial distortion. But when interest rates eventually begin to rise, future home sales will be impacted and the return on investment may not meet every ones expectations. This is because higher rates curb housing price appreciation.
This is why many experts are waiting for a normal interest rate environment. For them normal rates are higher than the current 3.5 percent. Many consider early 2000s as a normal market for housing. According to Zillow, there are more than five million renters waiting on sidelines looking to buy a home. Out of that four million are expecting to close a deal in 2015. Wage growth, still fragile economy and several other factors are still holding back many.