Positive signs for ’14 housing market
By Michele Lerner, Realtor.com
The U.S. real estate market made a robust comeback in 2013, surpassing expectations of many economists, as the combination of low inventories and historically low interest rates caused home prices to rise and even helped fuel bidding wars in some markets, surpassing the expectations of many economists.
While positive trends, such as increasing home values, are expected to continue into 2014, mortgage rates are also expected to rise in the coming year and could put a damper on home buyers’ abilities to afford new homes.
Looking back at some 2013 data can give us a hint of the year ahead:
1. Inventory should gradually stabilize
The beginning of 2013 could be characterized as the “year of low inventory” as buyer demand ramped up and homeowners waited for further price increases and evidence of a solid economic recovery before putting their homes on the market. The year began with a significant shortage of inventory and then as early as February the level of shortages started to decline slowly. As 2013 comes to a close, inventory is approximately the same as a year ago. However, homes are selling faster than in 2012, with the median age of the inventory down by 11 percent.
2. A return to positive equity
Rising prices helped 2.5 million homeowners who were previously underwater regain positive equity status during the second quarter of 2013. However, approximately 7.1 million homes were still in negative equity at that time and an estimated 10 million homeowners, or about 21.1 percent of all homeowners with a mortgage, remained “under-equitied,” with less than 20 percent in home equity. The good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory. Median list prices for homes in October rose 7.57 percent above the same month of 2012.
3. Mortgage rates expected to rise
Mortgage rates increased approximately 100 basis points in 2013 and are likely to rise in 2014. The new chairman-designate of the Federal Reserve, Janet Yellen, is expected to continue the policies of Chairman Ben Bernanke, including keeping mortgage rates low by buying blocks of mortgage-backed securities. However, the Fed has considered tapering its bond-buying activity as the economy improves, which could lead to a slight increase in interest rates.
Well Michelle, this is just going to anger the Pro 18th Century/The sky is falling crowd. Isn’t there some “doom and gloom” in the real estate market you can talk about? I mean, all the 18th Century Cons were hoping: the Stock Market would tank, real estate would tank, the economy would tank, unemployment would be at 25% and we would be at War with Iraq, Libya, Iran and Syria by now… with Nukes! So, can you throw them a bone?
Buy now before your priced out forever.
WHAT’S HAPPENING HERE ? The real estate markets are recovering at different rates around the country. I’d like to know more about what’s happening here in South Lake Tahoe. What do you people see ?
Most of the killer deals are gone. We seem to be heading toward a more consistent market.
Be careful of claims that a home sold for X% more in one year. The sellers may have got a once in a life time deal or more likely they invested tens of thousands of dollars in repairs and or a full remodel.
This market follows the Bay Area markets, and its ripping pretty good down there. Expect steady activity through the summer, though not quite like last summer with many multiple offers. This may be the first summer selling season of the new, bottom of the stabilized market.
Rock4tahoe, I agree, those kooks have run their course, now out of ammo. Must be tough to be WRONG all of the time on that losing team.
Our little market will chug along as the Bay Area market continues to stay strong. That tide will push our values along through this summer with the wild card of the interest rates. I think a small increase in rates will not overcome a newly developing confidence in the economy with buyers. Janet Yellen will do her best to allow interest rates to stay low and promote job growth. Expect to pay retail on remodeled homes with very few REO or short sale opportunities. Do not expect to get rich buying and holding with no improvements, those days are gone. I am not a realtor, I am an investor. I would expect 4-6% annual growth this year barring further knucklehead moves from congress or nutball dictators internationally.
Looks like the Game has been ‘rebooted’.