2014 Market: Potential Balance Real Estate Market?

This morning I came across this great article on Housingwire.com regarding the current market of 2013 and a small glimpse of the market to come in 2014.  During the mid-year, predictions of a strong Seller's market was predicated in 2014 with interest rates up in the 5% range.  As the fall and winter season approached, a real estate shift from seller's to balance market.

Home buyers are more cautious in the buying process as home prices rise especially with buyer's who reluctance to buy a home that deemed too expensive.  Builders are trying to make up for the lack of inventory with new homes claims Lawrence Yun, chief economist for the National Association of Realtors.

This is a good and bad news.  Good news for owners and home sellers who are getting appreciation and increase in housing equity which helps the economy in terms of consumer spending.  Bad news for potential homebuyers getting discourage from buying due to rising home prices and strict lending.

I agree with Brena Swanson, author of the article, when she writes, "If prices increase, homebuyers may choose to step out of the market if sellers do not adjust their list prices."

It looks like Sellers will be in a good shape in 2014 as prices will edge upward with little room to move further.  Only time will tell....

Prediction of Price Growth Will Slow Down

2013 has been a rollarcoast in home prices and setting breaking levels in certain areas.  Many buyers are asking if this new trend is a bubble and will it end?  Let's take a look.

Since June of last year, home prices have rose by 11.9%.  On a seasonally basis (real estate has seasons) there was a 0.6% from May (spring) to June (summer).

According to Wall Street Journal's Nick Timiraos, prices will still rise but not as fast as this previous year.  This could mean that the 'bubble' everyone was asking about...isn't a bubble that will burst.

WHY????

Economists from Goldman Sachs Group offered three reasons why home price gains will be moderate:

1) Housing is no longer that cheap.  Prices in relations to incomes and that relation to rents - home prices are no longer "undervalued" as they did two years ago.  Recent home prices gains have put home prices on a national basis back at "fair value."

2) Sharp spike in mortgage rates led buyers to pause. With the low historical interest rates created an urgency to jump into the market.  Since the 1% increase in June, buyers are stepping back and re-considering their options.

3) Biggest drivers of price gains are going to play a smaller role going forward.  Home price have increased in part of the decline in foreclosure and distressed homes.  Investors are slowing down their purchase because the bargains of last year has dried up.

So.... unit there is new construction which is gearing up to open by next year (go to NewHomeSource for upcoming development communities) - it looks like this upward trend will continue into 2014.

Source: The Wall Street Journal

2013 Housing Prediction from Freddie Mac

by Yvette Betancourt

Here it is! Straight from Freddie Mac's Frank Nothaft, chief economic's for Freddie Mac!  So what does he predict for 2013 housing ?

Housing Activities

The turnaround was in 2013 and 2013 will continue to pick up. Nationwide, home sales were up 9% in 2012 from 2011.   Frank Nothaft predicts housing prices could rise an additional 20 percent and home sales rise another 8% to 10%.  Great News for Southern California as he see a pickup in home prices and sales. 

Mortgage Rates

Rates will stay very low due to the Fed's decision to continue buying up large quantities of mortgage-backed securities.  The 20 year fixed conforming loan rate is expected to remain below 4%.

Distressed Levels

 Foreclosure reamin at high levels but the "shadow inventory" has come down during the past two years.  There is still 3 million homes that are in serious delinquent. Bank Owned home supply will be limited in 2013.

Progress of Recovery

The Fed recognized that the housing market has been lagging and they introduce Operation Twist and dedicated to push mortgage rates to record-low levels.  

Sounds like a 2012 housing year with increase in sale prices and sales.  Sounds like a great time to buy and take advance of the low interest rates.  Perhaps time to sell and get top dollar for your property.