As the New Year Dawns, Changes in the Real Estate Industry Become Apparent
As the New Year dawns upon the country, what new things will be seen in the real estate industry? Obviously, there is no surety for what will happen and what will not, but industry experts have made their predictions.
Last year saw so much of bidding wars and incredible mortgage rates. Not anymore; in 2014, you can say goodbye to all of this. According to a reputed chief economist of a prestigious real estate firm, there are good chances that potential homeowners are going to find it a lot more difficult to buy a home, and affordability will become even worse. Why would this be? The most influential answer is a rise in mortgage rates, which means not everyone would be able to make use of them. On the upside, inventory supplies will be on the rise so there will be many choices for the to-be homeowners.
In the past few years, the interest rates reached record low only because of the $85 billion bond buying program. This year, the Central Bank has decided to taper purchases right from the first month, and now if the rates rise, it will not be a surprise. According to an industry expert, tapering led to a slight increase in rates in the month of September, even though at that time, it was only being talked about. When it actually starts being practiced, well, the rates are bound to rise.
A rise in rates is not good from a buyer’s point of view. But what is? What benefit do they get this year? Higher inventory levels. As for the home values appreciation, it is going to experience a decrease in rates. In 2013, appreciation was around 5%; this year, it is expected to be around 3%. In 2013, inventory levels tightened because of the excessive rise in summers. Come 2014, this will probably not be so. Home prices may rise, and so investors are going to back out of the market. The after result? Increase in supply values.
2014 will also see less strict mortgage laws, making it easier for buyers to qualify for loans. Unfortunately, though loans will be easy to get, the payments and other expenses will also rise along with it.
We’re all waiting until after the first quarter of this year to see what 2014 holds for us and the rest of the country.
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