Real Estate Pulse: Looking Back & Moving Forward
SI Real Estate would like to wish our
friends, family, clients, and associates a very Happy New Year! We wish you
happiness, good health, and prosperity throughout 2014 and beyond. 2013 was a
wonderful year for SI Real Estate, and we sincerely thank you for your loyalty
and support.
As the stabilization of the real
estate market continued to improve over the year, it created extreme excitement
about what 2014 may hold for the market, especially in our Tampa Bay area. In
this blog, we will briefly discuss the most recent events that occurred in the housing
market during the final months of 2013, as well as discuss what the real estate
industry may see during the year of 2014.
Looking
Back
Due to the short supply of inventory
throughout the majority of 2013, the real estate industry witnessed some swift
price increases resulting from the increased demand for homes. In response to increased
demand, constructing spending reached the highest point the market had seen in
the last five years. Sales, pending sales, median prices, and closings all saw
significant increases. Shadow inventory levels, properties in foreclosure
withheld from the active market, began to diminish as the recovery of the
housing industry persisted. The Federal Housing Administration made strides to
make homeownership possible for previously financially challenged individuals
and families, who endured foreclosures and short sales, by reducing the waiting
period from three years to one year, after achieving financial stability with
verifiable income and repaired credit scores.
Moving
Forward
According
to David Crowe, chief economist for National Association of Home Builders, “the
cards are in play for a decent and fairly strong recovery in 2014 and particularly
in 2015.” For all those involved in the real estate industry, we hope that
Crowe’s statement proves to be true. So what changes can we expect to see in
2014? For starters, mortgage rates are expected to increase sometime this year.
In fact, Zillow has predicted that mortgage rates will most likely reach 5% by
the end of the year. Although this seems much more significant than a 3-4% rate
like we have witnessed over the last few years, the increasing rates are simply
returning to the normal levels from before the housing bubble.
With
the rising rates comes one significant advantage; mortgages will be easier to
get than in 2013. According to Erin Lantz, Zillow’s director of mortgages,
“rising rates means lenders' refinance business will dwindle, forcing them to
compete for buyers by potentially loosening their lending standards."
Zillow also predicts that home prices will rise by 3% in 2014, which will allow
for the increased availability of new and old homes for sale on the active
market. Unfortunately, home prices and mortgage rates are increasing at a
faster pace than the income levels for many Americans, which may ultimately
affect the affordability of home purchases for some.
Just
as we wrote about the diminishing shadow inventory levels in November,
underwater mortgages and foreclosures are expected to continually decline
moving into 2014. With the increase in home prices during 2013, and the
predicted increase in 2014, many homeowners will regain positive equity and
possibly move into more affordable locations across the nation.
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