Real Estate Housing Outlook for 2014: Looks Positive!

crystal ball

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!

Sellers market?
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.

How Far Away Do People Typically Move?


How far away do people typically move? 5 miles? 10 miles? 25 miles? 50 miles? More? If you answered 10 miles, then you are correct!

Per the National Association of Realtors, the median distance between the home purchased and the previous residence is just 10 miles.

Statistic from: National Association of Realtors Home Buyers and Sellers Guide 2013


Top Reasons Why People Purchase a Home


Per a report from the National Association of Realtors, here are top reasons why people purchase a home:

Top Reasons Why People Purchase a Home

  • Desire to own a home
  • Desire a larger home
  • Need to relocate for a job
  • Change in family situation
  • To be closer to family and friends
  • Desire a better area
  • Desire a smaller home
  • Retirement
  • Close to job/school/transit

Why Purchase a Home Now?
Homes are affordable! Mortgage interest rates are still low and although housing prices have started to rise, our market areas still show a great value in housing costs.  People can still get a lot of home for a good price.

Data source: National Association of Realtors – 2013 Profile of Home Buyers and Sellers

Median U.S. Home Price Values – Second Quarter 2013


Interested in taking a peek at home price values throughout the United States? Look at the National Association of Realtors compilation of housing data for the second quarter of 2013 here.

  • Cincinnati’s median home price is $143,800 with a 6.2% increase
  • Dayton’s median home price is $113,800 with a 5.7% increase
  • Honolulu’s median home price is $660,100 with a 4.8% increase

Contact your favorite Sibcy Cline agent for an up-to-date report of what home prices are doing in your area!


What Does the Government Shutdown Mean for Residential Real Estate?


The U.S. Government shutdown – how will it affect residential real estate? The National Association of Realtors (NAR) is reporting daily updates on this topic. As of October 1, 2013, here is what NAR is saying:

WIth the failure of the Continuing Resolution to provide funding for most government operations, many government programs are now shut down. Agencies are required to have contingency plans in place to keep running and most that affect residential real estate are continuing to operate.

Internal Revenue Service (IRS) -The IRS has suspended processing request for tax return transcripts. (Even though FHA and VA loans do not required these transcripts, they are required by many lenders.) For loans requiring this information, Fannie Mae and Freddie Mac have adopted relaxed provisions to allow closings.

Social Security Administration (SSA) – The SSC is closed and suspended most customer service functions.

Federal Housing Administration (FHA) – The FHA will endorse new loans for single-family loans (but not multi-family loans). There will be delays with FHA processing.

VA Loan Guaranty Program – Lenders will process and guaranty loans. There will be delays in processing.

Flood Insurance – FEMA will not be impacted by the shutdown.

Rural Housing Programs – Field staff who issue commitments and guarantees for the rural housing program are impacted by the shutdown as they are not considered essential personnel. Lenders will not receive approvals during the shutdown.

Fannie Mae and Freddie Mac – These organizations will not be affected by the shutdown.

Treasury –  Making Home Affordable (HAMP and HAFA) will not be affected by the shutdown.

Read more about each agency as well as updates from NAR here.

Benefits of Homeownership


The National Association of Realtors created an interesting infographic about the benefits of homeownership.

  • 88% of current homeowners report owning a home has been a positive experience
  • A homeowner’s net worth is 34 times that of a renter
  • Most homeowners (95%) and renters (72%) believe that over a period of several years, it makes more sense to own a home than to rent
  • 77% of homeowners say it helps them achieve long-term financial goals
  • 70% of homeowners say it helps them achieve the American dream
  • You can deduct mortgage interest on your home from your Federal tax return. Local property taxes are also deductible.

Another benefit to buying a home is the effect on the economy.  Nationally, for each home purchase, $60,000 in direct (and indirect) spending occurs in the economy.

Information courtesy of Houselogic blog.

Repeat Buyers at Helm of Housing Recovery


The National Association of Realtors reported that 54% of existing home sale purchases were made by repeat home buyers in June 2013 – a 49% increase from June 2012.

First-time buyers (who usually account for 40% of purchases) had only 29% of the share of home purchases for June 2013.

Repeat buyers are fueling the housing market recovery.

What is happening?

  • Home owners who have waited on the side lines are now buying homes. With rising home prices, these home owners feel confident to sell their homes and purchase another.
  • The stabilized economy has created confidence. People feel more positive about their financial situation and making a home purchase.

Read a Bloomberg News article about home sales by repeat buyers here.