Indeed, in 2013, the real estate market of the United States made an explicit comeback, exceeding the expectations of several economists, as the blend of historically low interest rates and low inventories triggered the home costs to increase, as well as sparked bidding competitions in some markets. While there are positive trends, like soaring of home values, it is anticipated that such trends will continue this 2014. The mortgage rates are also anticipated to increase in 2014, which could impede the abilities of the home buyers to purchase new homes.
Now you will know about what the real estate experts and economists think about the housing market for 2014.
The inventory is expected to gradually stabilize so as go back to the conventional seasonal levels.
The start of 2013 is defined as the “year of low inventory,” since the home buyer demand increased, while the home owners waited for prices to soar and proofs of sturdy economic recovery prior to placing their home properties on the market. That year started with a tremendous shortage of inventory, based on the report of Realtor.com.
However, as early as February, the shortage level begun to decrease gradually. The inventory last 2013 is similarly low as with 2012. The difference is that the homes in 2012 are selling much quicker than in 2013.
There is a possibility that the homeowners will go back to positive equity
Increasing costs aided 2.5 million home owners, who were formerly underwater, redeem positive equity status, specifically during the 2nd quarter of the year 2013. But there are about 7.1 million home properties that still belonged to negative equity during that time. It was estimated that 10 million home owners or approximately 21.1% of all the home owners that have mortgage remain under the equity, with lower than 20% in home equity. Good news since the prices are anticipated to constantly rise in 2014, which could uplift more home owners and be brought to a positive territory.
The mortgage rates will rise
In 2013, the mortgage rates soared about 100 basis points, and there are chances that it will continue to rise this 2014. Janet Yellen, the new chairman of the Federal Reserve, is anticipated to continue the regulations of the former chairman, Ben Bernanke, which include the maintaining of the low mortgage rates through purchasing mortgage-backed securities blocks. However, the Federal has taken into consideration tapering its bond-purchasing activity as the economy augments, which could result to a bit leverage in the interest rates.
Further decrease in home affordability is anticipated
National Association of Realtor’s Home Affordability Index, or the one that compares the costs of homes with income, has reached a 5-year low in 2013, as the cost increases surpassed income growth. If the economy of the United States starts to grow at a quicker pace, and the incomes start to increase, though, expect that the affordability index will further slide from the soaring mortgage rates.