2013 was the year of the housing recovery. Experts are now predicting a positive and solid real estate market for 2014:
More homes will be available
The home shortage seen in 2013 drove home prices upward. With new construction on the rise and and rising prices of homes, there will be more new and old homes on the market, bringing inventory levels back to normal.
Mortgage rates will rise
Mortgage rates are predicted to climb to 5+% by the end of 2014 says Lawrence Yun, chief economist of the National Association of Realtors. Although not at historic lows, these rates are still considered to be low.
Mortgages will be easier to obtain
With rising rates, refinancing of homes will dwindle. Lenders should be easing their lending standards, making obtaining a mortgage an easier process.
Home prices should increase 3%
2013 had a nationwide 5% increase in house prices with prices rising in 225 U.S. cities. (See home price changes for U.S. metro areas here.) Experts are now predicting gains between 3% to 5% for 2014. This will be a slower-paced year as compared to last year.
Fewer homeowners will be under water with their homes
With home prices rising with its highest values in six years, more homeowners will gain positive equity in their homes. Those people who were formerly underwater with their home values will now be able to buy and sell homes.
Affordability will decline
With mortgage rates rising, it will be more expensive to own a home. Income levels are not keeping pace with the increase in housing costs and thus the affordability of homes will not be high.
People will be moving, but home-buying will not be so crazy
Experts predict people will be moving to new homes in 2014. The Conference Board (a nonprofit association of businesses) is predicting that the percentage of people intending to buy a home in the next six months will be the highest since 2000.
The younger generation of first-time buyers who currently rent or live at home will also be looking to buy homes in 2014.
With more inventory, more mortgage credit and fewer investment buyers due to the higher home prices, the buying process should be more normal and not such a frantic pace as seen in 2013.
There will be less foreclosures
Predictions are that foreclosures will continue to decline with the housing recovery. (September 2013 was the 36th consecutive month with a year-versus-year decrease in foreclosures.) This is good news for everyone!
Nationally, the supply of home for sale is 5 months’ worth and is still a seller’s market. (Note: A month’s supply is a measurement of how long it would take to sell everything at the current pace of sales. A balanced market usually has about 6 months worth of homes.)
Read the Forbes article here about the housing predictions for 2014.