What to Expect for Stocks, Housing and Oil Prices in 2015

Photo (cc) by marko8904

It’s a January tradition: Every year Money Talks News founder Stacy Johnson asks a few folks on the street their predictions for how key components of the economy, the stock market, oil and housing prices, will do in the new year.

Watch the video below to see what our Main Street and Wall Street prognosticators are saying is in store in 2015. And then keep reading to learn more about how experts expect the economy will perform in the new year.

Oil

Falling oil prices were a surprise gift to American consumers late last year. The average U.S. price for a gallon of regular gas Wednesday was $2.191, according to AAA’s Fuel Gauge Report (use the clickable map for prices by state). Last year at that time, we were paying $3.314 a gallon on average.

Neither amateurs nor expert forecasters saw a big price drop coming. The U.S. Energy Information Administration predicted oil prices of $95 a barrel in 2014. Stacy talked with a consumer who expected oil would cost on average more than $100 a barrel in 2014. The price of crude was $51 Wednesday.

What’s next for oil? It’s anyone’s guess. Stacy recently talked with a consumer who expects oil will cost $90 a barrel by year’s end. That’s not likely, experts say:

  • The Energy Information Administration predicts oil will cost on average $62.75 a barrel in 2015.
  • CNBC said HSBC forecasts $95 a barrel in late 2015, and that Morgan Stanley expects $70 a barrel in 2015 but also said prices could fall to $43.
  • One expert told CNN Money that prices could fall below $40.

What’s this mean to you and me? If crude oil were to cost $40 a barrel, pump prices for a gallon of regular gas would average roughly $1.80, CNN Money says. While cheaper gas prices are good to a point, the U.S. is a big oil producer, and if oil becomes too cheap it could hurt the economy.

Home prices

Home prices on average rose in 2014. These two S&P/Case Shiller home price indices show the national picture:

  • The S&P/Case Shiller 20-City Composite Home Price Index found prices rose 4.5 percent in key metropolitan areas.
  • The S&P/Case Shiller U.S. National Home Price Index came to the same conclusion: Prices rose 4.6 percent nationally in 2014.

Can housing prices continue to rise? National Public Radio cites reasons for optimism for moderate growth:

  • Hiring is up. Unemployment is at 5.8 percent, down from 10 percent in the recession. More jobs mean more paychecks, some of which may be put to use buying homes. Also, a growing economy gives homebuyers confidence.
  • Rents are high and going higher. The housing crash created more renters. That means more competition for rentals, which keeps pushing up rent costs. Depending where you live, buying can look good in comparison. As we pointed out last year, buying is expensive but renting can be even worse.
  • The feds have made owning easier. Fannie Mae and Freddie Mac recently dropped their minimum down payment requirements. Now, first-time buyers and others can buy a home with down payments as low as 3 percent. NPR quotes a Fannie Mae survey saying 9 in 10 young people want to own homes.

Forbes reported, “Zillow predicts home prices will rise just 2.5 percent in 2015; Realtor.com predicts an annual gain of 4 percent to 5 percent.” Stacy’s consumer predicted about 5 percent.

Stocks

Can stocks beat their 2014 performance? Last year the S&P 500 Index grew 11.4 percent, according to The Wall Street Journal. Include dividends, and the market index gained 15 percent, Bloomberg says.

The Dow Jones Industrial Average reached a record 18,000 in late December but has fallen recently.

Forecasters are upbeat about the market’s prospects in 2015. Stacy’s person on the street predicts stocks will do even better this year: “up 15 percent.”

Experts see growth, too, but at a slower pace:

The S&P 500 rose a total of 63.7 percent in the last three years, MoneyBeat says. But the U.S. economy isn’t bulletproof: Europe’s economy is weak, China’s previously robust economic growth is slowing down, and U.S. interest rates are likely to begin rising in 2015.

What do you think will happen with stocks, housing and the price of oil in 2015? Share your thoughts below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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