At the conclusion of each year, experts make predictions about what the housing market will look like during the next twelve months. For 2013, we saw a great deal of recovery as housing prices increased and the number of underwater homeowners dropped, so it should come as no surprise that the 2014 forecast looks just as promising.
For starters, with the rise in new construction homes and an increase in builder confidence, more homes will be available, which should help inventory levels return to normal.
With this, mortgage rates are expected to rise, hitting 5% by the end of 2014. While this is obviously up from the 3-4% rates we’ve gotten used to seeing, it’s still within the normal levels and at the end of the day, most experts expect mortgages to actually be easier to acquire. In short, rising interest rates force lenders to offer more lenient standards since they will be in competition for fewer buyers.
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Similarly, home prices are expected to rise another 3%, which means that fewer homeowners will be underwater, especially since a sizeable portion of this group began to regain positive equity during the second quarter of 2013.
With this, it is being predicted that more Americans will move during 2014; however, instead of making the switch to something bigger, many will opt for smaller homes which will offer more affordable mortgage rates in more reasonable locations.
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In short, the 2014 market is expected to be much saner. Gone are the days when houses were predominantly being procured by investors, while the average homeowner struggled to simply stay afloat. This year, less competition from investors with more mortgage credit and inventory, means that the buying process as a whole will be a much smoother ride.
