Negative equity is mostly to blame for the lack of sales since the housing crash, but those days are mostly gone. This enables Americans to sell their homes and start buying once again.
With some relief comes more homes on the market, equating to a healthier and more viable market come spring.
Home price increases will soften: Home prices in 2013 rose more than 12 percent as a result of investors sweeping up inventory at the low end of the market. However, Olick doesn’t predict the same pattern for 2014, rather she anticipates prices will increase, but only so slightly as foreclosures diminish and distressed sales taper off. A low inventory will keep prices from dropping.
Rents will increase: The rental market will continue to be strong throughout 2014, Olick says, despite the increase of homes coming into the market, as many first-time homebuyers still won’t be able to drum up enough cash to meet lenders’ requirements for down payments.
Investors will stay in the market: There’s still a strong and viable market for the large-scale, private-equity investors, and they will continue to sit tight, holding on to their inventory and still sweeping up deals from smaller investors, Olick explains.
Mortgage rates will rise: “The days of the 3.5 percent 30-year fixed are over,” she writes. As the Federal Reserve begins to taper its bond-buying programs, Olick suggests that rates will go even higher than the 1-point increase they have already in the last year. Those individuals with good credit should be able to withstand the higher rates even as mortgage underwriting becomes less forgiving.
With investors growing optimistic about the job market, mortgage rates are on the rise. The benchmark 30-year fixed-rate mortgage held steady at 4.55 percent for the week ended Dec. 11, according to the Bankrate.com national survey of large lenders.
“The start of a taper is possible,” Dan Green, a loan officer for Waterstone Mortgage in Cincinnati, tells Bankrate. “The prudent, defensive move is to lock a rate before the Fed adjourns.”
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”