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US Housing Market Predictions for 2014
US Housing Market has encountered some bold changes in 2013 – home values have risen in most markets (home prices rose in 225 of the 276 cities tracked by Clear Capital, a provider of real estate data and analysis) by an average of 10.9%, negative equity has diminished, therefore foreclosures have also dropped, and mortgage rates have also climbed from the bottom.
US Housing Market:
In 2014 this positive trend will keep improving. Zillow has made 4 positive predictions:
- US Home Values will increase by at least 3%;
- Mortgage Rates will reach 5% by the end of 2014;
- It will be easier for borrower to get a mortgage in 2014;
- Homeownership rates will fall to their lowest point in almost 2 decades.
Zillow also lists the 10 Hottest Cities in the US Housing Market for 2014:
- Salt Lake City
- Seattle
- Austin, Texas
- San Jose, California
- Miami
- Raleigh, North Carolina
- Jacksonville, Florida
- San Diego
- Portland, Oregon
- Boston
Real estate market experts agree that US Housing Market prices will rise in 2014, but at a slower, more steady pace than 2013. Zillow estimates a 3% price increase, while others, like Kiplinger, estimate more towards 4%. Regardless, prices will rise.
Lenders are loosening up their borrowers’ requirements, therefore we will see a large increase of buyers in the market, who have waited for more job stability and more favorable lenders’ regulations.
As home prices continue to rise, more home owners who had been underwater–meaning that they owed more on their mortgage than their home was worth–will come around and start selling and buying homes. CoreLogic reports that almost 3.5 million homeowners were lifted out of negative equity just in this last year. Nevada, Florida, Arizona, Michigan and Georgia have the highest shares of underwater homeowners.
US Housing Market – A Seller’s Market
The supply of properties in the market has been declining sharply through 2013: hedge funds investors have been buying properties in bulk as investments to rent out, builders have cut back on new construction and are cautiously re-entering the market, and homeowners either they are reluctant in selling until they feel confident that the market has turned around or they are underwater and waiting for values to increase in order to sell and pay off the mortgage without incurring a short sale.
The good news – since the easy to locate properties in distress (auctions, foreclosures) are diminishing, even the larger investors/buyers (i.e. hedge funds) have to rely on smaller local investors to locate properties, therefore opening up a new outlet to sell real estate for wholesalers to ready-cash buyers.
“We’re in the homestretch of getting through the foreclosure crisis,” says Daren Blomquist, vice-president at RealtyTrac, which monitors the foreclosure market. “But we won’t cross the finish line, with filings back to pre-crisis level, until early 2015.”
The US Housing Market is definitely on a steady recovery, but it will not be the same real estate market prior to the housing meltdown. Real estate investors have to recognize and implement a new way of doing things – the investors who will thrive will be the ones who can find properties that no one else knows about, like vacant homes, abandoned properties, tax delinquent properties and non performing notes. There are plenty of cash buyers out there looking for properties, so it will not be an issue any longer of whom to sell the properties to.
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