Housing market showing slow, steady growth
Thursday, March 27, 2014
All eyes are turned toward the housing market now that the economy is showing signs of positive recovery. The housing market had been hit hard in the past few years, with both builders and sellers paying the price for the recession.
But the market is moving ahead at a slow and steady pace, especially as far as prices are concerned. There also seems to be a balance between mortgage and price trends, which will go a long way to stabilize the market.
Some of the definitive housing trends to look out for in 2014 are:
Slower rise in home prices
Buyers are no longer high-fiving each other over low housing prices, for the industry shows definite signs of rising home prices this year. But the rise will be a steady one that will not jar the market or scare away buyers like before.
According to Clear Capital, home prices increased by 10.9 percent across the nation in 2013 and will now see a 3-5 percent rise in 2014. This figure may look small, but experts say 2014 is slated to see more buying and selling than the previous years.
Also, there may not be that frenzied sense of urgency to take advantage of low prices, but with wider options in the market now the level of actual transactions will be healthier.
According to the Conference Board, a nonprofit association of businesses, the percentage of people who are looking at home buying in the next few months is at an all-time high since the last decade. They know that the market is looking up and they want to close in before it gets out of hand.
A seller's market once more
2013 saw 5.09 million existing homes and condos sold — the strongest performance since 2006. This trend will continue in 2014, though in a much steadier pace, according to the National Association of Realtors.
This year will also see initial level of renting for these homes before people invest in buying since this action is directly proportional to how their jobs and careers are faring in the new economy. This will push up the rental market, which is already facing some pressure from the lack of affordable rents.
Areas that are showing strong job growths are seeing a faster opening of the real estate market. Homeowners can now look forward to profits from their investments, whether they are renting or selling.
With brighter prospects and more savings, they can look forward to more buying competition without having to settle for the "decent" offer among the few pitiful ones.
Second-tier cities will lead the market
Second-tier cities like Portland and Dallas are showing more promise than the leading ones like San Francisco and New York City. Along with them Austin, Houston, Boston, San Jose, Seattle and Miami are showing good prospects for real estate investors and developers now.
One of the reasons they are showing such definitive growth is their positive and upbeat job market and the still-affordable housing prices compared to the top-rung cities. This seems to especially true of many Texas cities, which is not surprising since the state suffered least from the last recession.
What is surprising is that a few cities in and around the Bay Area have also showed positive housing growth. This is as much a testament to a better job market as it is to the rise of millennial investors once again.
Low mortgage rates to high
Mortgage rates have been on a record-breaking low with just 3.5 percent for the majority of qualified buyers for 30-year fixed rate mortgages. According to the National Association of Realtors, these rates are going to climb up steadily to 4.6 percent and above, so if one is planning to invest in real estate, now is the time.
The Federal Reserve has recently decided to scale back on the bond-purchasing stimulus program, and the higher mortgage fees on Fannie Mae and Freddie Mac loans will result in higher borrowing rates eventually. Even with high credit scores and healthy down payments, borrowers may be looking at much higher monthly payouts by the end of the year.
Restricted purchase power
The New Year saw the reduction of the maximum loan amount on FHA loans across the country. This will adversely affect many borrowers, especially those who live in low-down-payment, top-rung cities like New York and San Francisco.
As a direct repercussion, Fannie Mae and Freddie Mac also are considering reduction of their loan limits in most markets now. The logic underlying this move is that the mortgage market needs to get off government support and have more active participation from the nongovernment-guaranteed mortgages.
But with lower limits and shrinking loans, the percentage of eligible home buyers will be severely affected as will the pace of the housing recovery.
- Interior design is not about flowers
- Window film improves building system performance
- Emerging green building material technologies to watch
- 3-D printing is revolutionizing construction and design fields
- Watch out for these 3 common electrical safety hazards
- Why stress is causing interior designers to leave the profession
- Indoor lighting and its effect on emotions
- The rustic-chic trend is taking over interiors
- 5 ways to help your patients achieve better rehab outcomes
- The nurse’s emotional bank account
- Zugunruhe and companion animal behavior
- Beyond teachers: Estimating individual school counselors’ effects on educational attainment
- Award-winning Austin, Texas, dental practice sets a standard for innovation
See your work in future editions
Your content, Your Expertise,
Your Industry Needs YOUR Expert Voice & We've got the platform you needFind Out How