Good news! It is predicted that through 2014, existing-home sales are expected to stay on the up and up! 2013 has been a great year full of healthy gains and that momentum looks like it will continue.
According to the National Association of Realtors (NAR), existing-home sales have show a 20% cumulative increase over the past two years! Home prices have gained 18% too!
“We’ve come off of record high housing affordability conditions in the past year, and are now at a five-year low, but conditions are still the fifth best in the past 40 years,” said Lawrence Yun, chief economist for the NAR. “While the median-income family in many areas will still be well positioned to buy a home in 2014, income is barely budging given growth in consumer prices.”
Other issues include limited housing inventories that make it hard for homeowners to find an affordable place that they love. Once they do find the perfect home, they then have to face unnecessarily strict mortgage lending standards. These restrictive policies stem from Fannie Mae and Freddie Mac's rising fees, higher premiums from the FHA, and the Dodd-Frank banking regulations. All of these have had a negative impact on community banks. Larger banks are said to be holding on to funds just in case they are sued by the Department of Justice. This takes away from available to mortgage borrowers, thus the tighter qualification requirements.
“Although home sales have recovered over the past two years, mortgage purchase applications have been flat for the past four years, even with rising sales,” Yun said.
2014 may see a dramatic decrease in refinancings because of higher mortgage rates. It may even hit the lowest levels we've seen in 15 years! To counterbalance this collapse, purchase applications will really need to rise. “This is an incentive for banks to increase mortgage origination, especially considering the low default rates in recent years. But even with cheap mortgages for the past four years, all-cash buyers stayed high, accounting for over 30 percent of sales,” he said.
According to Yun, the only way that higher mortgage interest rates can be tolerated is if there is an increase in job creation as well as a relaxation of restrictive lending standards. And the only way to alleviate housing inventory shortages is to have an increase in housing starts. They need to rise 50% in order to meet the underlying demand!
Right now, the best thing we can do to help the housing market is to consider purchasing a home in 2014. Lock in the lowest rate possible and pay the mortgage every month. The more stability we can individually achieve, the better the whole economy can be in the long run.
If you are in the market for a new home, give us a call at 877-828-8851. We'd love to help you get through the mortgage process and into your dream home!
Friday, November 15, 2013
Housing Market Predictions for 2014
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