I ended my annual real estate predictions column last year with:
- “2013 may be the BEST year ever to buy a home, with incredibly low interest rates and property prices just beginning to rise. Don't be one of those that in 2014 or 2015 say: "I remember when I could have bought that home for $X" or "I missed the opportunity of a lifetime in 2013."
1. As the real estate recovery continues, consumer optimism will continue to rise to its highest level in years. (or perhaps the other way around) This is the same optimism that has seen us through government shutdowns and near stagnation in Congress.
2. The housing recovery will result in some declining affordability. Buying a home will be costlier in 2014 than in 2013, the result of appreciating home prices and higher interest rates. The good news is, with higher inventories expected, prices will not rise at the same rate as last year which was clearly a “Seller’s Market”.
3. Interest rates will rise, as they have historically during recoveries. Expect to see rates at or slightly above 5% by year end.
4. Move-up buyers will take center stage. Last year was the year of the investor, those who realized the market had hit bottom and took advantage of prices and continued low rates. This year the market will be dominated by regular buyers.
5. The second home market will re-emerge in 2014. Investors (see #4 above) and vacation homebuyers, slightly behind the primary home market, will follow the trend.
6. Mortgages will be more readily available and attainable, as lending moves from the investor level back to the end-user level.
7. Prices that rose quickly last year in many areas will slow to a more moderate and sustainable pace. I predict home values will increase by about 3% in 2014.
8. 2014 will mark a change from 2013’s “year of low inventory” back to more normal market inventory levels.
9. As more homeowners return to positive equity levels, more homes will be placed on the market and foreclosures will continue to decline significantly.
10. New home construction will soar as developers who have been waiting on the sidelines, many with approved projects, begin to build again.
All in all, 2014 is shaping up to be a very good year for real estate. And that's a positive sign for our entire economy. Don't be caught waiting on the sidelines.
Jay Burnham, Premier Agent
Coldwell Banker Residential Brokerage, North Shore