Top Trends In Real Estate For 2014

RIS Media, Top Trends in Real Estate for 2014, by Jeff Collins, January 11, 2014

Economists predict 2014 will see more buyers putting roofs over their heads, home prices are expected to stabilize, and homebuilding will be more frenetic. "The housing market has staged a spectacular recovery over the past year," Cal State Fullerton economists Anil Puri and Mira Farka wrote in their 2014 economic forecast. "More recent data, however, point to a softening of these trends."

• 1. More Inventory:
  You can expect to see more people putting their homes up for sale this year, as rising prices bring new equity to underwater homeowners. Other property owners also may take the opportunity to get their lives off hold and take advantage of higher home prices. "I'm hoping that, since interest rates are still low, it's a better opportunity not only to sell, but to rebuy," said homeowner Donald McCray. Another factor: New home construction is expected to increase further this year, further boosting options for home shoppers.
• 2. New Home Sales to Rise:
  Nationwide, forecasters expect the number of housing starts to range from 1.19 million to 1.25 million, up from 975,500 in 2013. Builders are compensating for years of sub-par construction levels, says Robert Denk, an economist with the National Association of Home Builders. "There's a huge construction deficit," he says. An increase in homebuilding means that new home sales should go up, too.
  When construction levels fell, "buyers were forced into resale homes," says Irvine, California housing consultant Mark Boud. Many buyers prefer newer homes which have the latest designs and are more energy-efficient. "The reason (new home) sales will increase is we are supplying more product," Boud says.
• 3. Mortgage Rates to Rise:
  Interest rates for 30-year, fixed mortgages likely will rise this year, averaging somewhere in the 4.9 percent to 5.3 percent range, forecasters say. That's still low historically, but well above rates for the past 2½ years. The average rate for a 30-year fixed mortgage had been solidly below 4 percent since late 2011. Last summer, it spiked to 4.5 percent. "Rates are not going to soar because we are still in a pretty weak economic recovery," Denk says. "Rates are still a bargain."
• 4. Credit May Get Easier:
  After years of tight lending standards, homeowners definitely will have an easier time getting mortgages, says Svenja Gudell, director of economic research for Zillow. After last summer's 1-percent-point increase in mortgage rates, the refinancing business dried up for lenders. "They want to fill that void with purchase money loans," Gudell says. That may mean lenders may approve loans to borrowers with lower credit scores or higher debt. So we'll see a lot of people who couldn't get a mortgage in 2013 able to get a mortgage in 2014," she says.
• Others, however, aren't so sure.
• For one thing, new federal lending standards take effect on January 10, meaning that some borrowers will get more scrutiny and less money. The new rules will have little effect in most cases, Gudell says, since most loans already meet the new standards.

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