Just where is residential Real Estate expected to head in the coming year? As the gyrations and aberrations in the aftermath of the economic recession subside, stability in Real Estate will continue to improve, at least in most markets. As a result, trends in both positive and negative directions are more easy to track in 2014 than in the previous couple of years. Here are a few factors to consider as one ratchets optimism for the upcoming season; either up or down.
Tight inventories of residential Real Estate that impeded numerous U.S. markets in 2013 should improve in this year. Many potential sellers have remained on the sidelines as they waited for home values to rebound from the recessionary spiral of 2008-2009. Now, in many locales, values are at or above pre-bubble levels. Many of those that have had their reasons for wanting to sell, but have felt hamstrung for years, will likely conclude that this is the year that they can finally get fair value for their property. Furthermore, some sellers will understand that, with interest rates rising, the time to sell is now.
Problem of Affordability Remains
As 30-year fixed mortgage rates rise from the threes to well into the fours, and incomes remain flat for many wage earners, some prospective buyers will find that they qualify for far less home than they might have last year. Some who find that they are qualified to purchase $50,000-less-home than a year ago, for example, may simply continue to rent. In fact, the mere perception that affordability has declined will keep some from ever picking up the phone. Of course, it's more than just a problem of perception. The National Association of Realtors says that residential Real Estate affordability hit a five-year low in 2013.
Lower Unemployment Rates Bode Well
The aforementioned issue is offset somewhat because more workers are reentering the ranks of the employed. Unemployment rates have reached levels not seen for several years, and in 2014, unemployment rates are expected to decline even further as a more robust American economy continues to emerge. However, optimism over decreased unemployment rates should be tempered by the realization that many of those finally finding jobs are accepting lower-paying positions.
For some, 2014 will be a time of learning now that they now qualify for lower-priced properties than they did just a year ago. But some sellers will find that this is the year to make a move in an effort to get a fair and equitable price for their homes. Finally, renewed stability will be a welcome phenomena in numerous markets across America.