Adam Bregman, a 28-year-old Florida attorney who lives with his mom, said he hopes 2014 is the year he finally buys a home of his own.
Bregman’s prospects probably will hinge mostly on one person: Janet Yellen.
Yellen, 67, who takes over as chairman of the Federal Reserve if the Senate confirms her in a vote scheduled for next week, will hold significant sway over the direction of the U.S. housing market in 2014. Following last year’s jump in prices that rivaled gains during the housing boom, Yellen will guide the winding down of the Fed’s bond-buying program that influenced mortgage rates for five years.
If Yellen tapers too quickly, investors could panic, causing mortgage rates to surge, said Diane Swonk, chief economist of Mesirow Financial Inc. in Chicago and an adviser to the Federal Reserve Board. If the new chairwoman goes too slowly, low rates coupled with an improving economy will cause the housing market to overheat, Swonk said.
“Mortgage rates will decide when we buy a house and what kind we can get,” said Bregman, who has been living in his childhood home in Boca Raton for two years to save money for a down payment. “I’m hoping rates don’t spike up another percentage point, like they did in 2013.”
The average fixed rate on a 30-year mortgage was 4.48 percent last week, up from 3.35 percent in early May, according to Freddie Mac (FMCC), the government-owned mortgage securitizer. Interest rates began rising after Fed Chairman Ben S. Bernanke, 60, told Congress he was preparing to reduce the bond-buying program.
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”