5 Things to Watch in Housing During 2014
5 Things to Watch in Housing During 2014. An interesting topic to say the least, if you are in the market for a new home or looking to sell your current home. It really depends on who you talk to or who is writing another piece on the economy. The Wall Street Journal has a great little blog. Recently they published some excellent information sharing the 5 things to watch in housing during 2014. The blog can be found here.
To summarize the blog for those of you who don’t want to read the full piece the 5 things to watch, in their opinion, are:
1. WILL INVENTORY RISE?
Prices have risen largely because of shortages of homes for sale. The number of homes for sale remains relatively tight still. The consensus view is that price growth continues at a somewhat slower pace.
2. WHERE IS THE HOME CONSTRUCTION RECOVERY?
While home prices have recovered strongly, new construction activity hasn’t. Part of this may have to do with the fact that home prices are still too low to justify construction, particularly given land, labor, and materials costs. Key issues to watch here: What happens to household formation, and do builders begin to throttle back price gains in favor of selling more homes in 2014?
3. WHAT HAPPENS TO MORTGAGE CREDIT?
Lenders could begin to ease certain “overlays”—or additional credit and documentation checks—that have been imposed over the past few years. Mortgage insurance companies are getting more comfortable insuring loans with down payments of just 5%. This doesn’t mean it’s easier for everyone. Borrowers with more volatile or harder-to-document incomes, including the self-employed or those who make a lot of money on commissions, bonuses, or tips, could continue to face tough sledding.
4. WHAT WILL INVESTORS DO WITH THEIR HOMES?
Investor purchases played key roles in stabilizing prices, especially because investors were wolfing up homes at a time when supplies were already dwindling. A key question now is what happens after the initial rush to invest subsides. Will investors flood the market again or wait and see where the economy’s recovery goes?
5. WHEN DOES HOUSING HIT A TIPPING POINT ON AFFORDABILITY?
Rising home prices are a double-edged sword, especially in pricier coastal markets such as San Francisco and Los Angeles. On the one hand, rising prices are giving many homeowners equity in their homes again—an extremely positive development to the extent it means these borrowers are less at risk of foreclosure.
The housing/real estate market is fascinating. Recovery continues and buyers are becoming more aggressive in their approach to buying. But we have a ways to go. Predictions to date from the National Association of Realtors and many economists have held true. We are on the right track. This year and 2015 look to reflect continuing consumer confidence with increasing sales and property values.
Contact us today to discussing your home buying/selling options.
Until next time, Happy New Year!