2013 was an exciting year for housing as record low interest rates, tight inventory and rising home prices helped bolster the market’s recovery. So what can prospective home buyers and sellers expect this year? Here are three trends to watch:
• Higher Interest Rates – Expect to see mortgage interest rates rise as the Federal Reserve continues to taper its quantitative easing programs, which have kept average 30-year mortgage rates below 5 percent for 44 consecutive months. 2014 will be the year that rates go back above 5 percent, but by historical standards, that’s still cheap money and good for housing.
• Modest Price Appreciation – Last year, we saw year-over-year, double-digit price gains for nine consecutive months in the city. Looking ahead, as interest rates and home supply increase, home price appreciation will slow to more sustainable levels.
• More New Construction – For-sale new construction finally picked up steam in 2013 thanks to improved builder confidence. This trend should continue in 2014 amid pent-up demand and still-low mortgage rates, and will help drive the housing market throughout the year. Look for some big project announcements in 2014 with an emphasis on the luxury market.
Market Minute Teaser: Is your home protected this winter? Make sure by watching this month’s Market Minute video.