The property market has continued its skewed journey in 2013 but in 2014, it is likely to follow a more or less an even path. Optimism of the consumers has come back and many home buyers are now aiming at fulfilling their American Dream of home ownership.
Just before entering the new year 2014, one good news for the real estate industry is that on an average, home prices have increased over the past 2 years. This is particularly a good news for the home buyers who had been underwater. The real estate industry has also benefited a lot due to higher home prices. Despite these, the impact of recession has not been erased completely and the barriers to homeownership still exist. Anyways, given that no economic upheaval takes place in 2014, the real estate market is likely to normalize in the coming year. Here we aim at predicting the real estate market trends in 2014-
Mortgage rates
In 2012 and in early 2013, mortgage rates were close to historic lows. Thanks to the Federal Reserve as it came forward and took up the tough measures of purchasing government-backed securities on a regular basis. However, this purchase of the government bonds by the Federal Reserve will not continue for long. With drop in federal purchase of bonds, the mortgage rates are likely to increase. The Federal Reserve has already given hint that it will withdraw its support in a phased manner very soon. This will surely rise the mortgage rate in 2014 and the National Association of Realtors (NAR) has estimated that by the end of the next year, average rate on 30-year mortgages will move to 5.4%.
Home values
In the aftermath of the housing market crash, home prices have declined appreciably. But as the home market recovery process has set in, home values have started to make gradual gains. In fact, in 2013, home prices have moved up significantly. The rise in the home prices has been so prominent that many have shown their concerns that this is a sign of new housing bubble in the making. But, housing experts are of the opinion that this rise in home values is the normal correction of the housing values that plummeted appreciably during the housing market collapse. Now the home prices in many markets are close to their pre-recession levels. In 2014, the home prices are likely to see more moderate rises and it will move towards normalization.
Property foreclosures
In early 2013, the fears of property foreclosures loomed large, putting a big question mark on housing market recovery. But, during the last few months of the year, the rate of distressed sales declined and NAR is of the opinion that the national distressed sales will decline further in 2014.
Property inventory
In the first few months of 2013, there has been a shortage of home inventory, leading to rise in home prices. However, with an improved consumer confidence and easing of restrictions in the mortgage market, the home inventory is likely to loosen in the coming year.
In a nutshell, if no big economic upheaval takes place in 2014, the housing market in 2014 is likely to move more towards normalization and stability.