We are starting to see many 2014 predictions about the housing market with most pointing to increasing prices but at a slower rate than this year.
Home prices in 2014 are being forecast to grow anywhere from 2 to 6 percent but I am sure you can find predictions of higher or lower with a few even projecting a decline.Â
According to the projections from the National Association of Realtors (NAR), the number of home sales will likely see modest growth in 2014. They are projecting home sales of 5.12 million for 2014 which is close to the level now forecast for 2013. Although there is demand for housing the strict underwriting guidelines by lender, rising interest rates and low inventory will keep sales growth down.
Inventory of homes for sale is expected to improve in 2014.
According to NAR, inventory grew by 1.8 percent in September compared to the previous year. This was the first reported growth in inventory since late 2011 and is a positive sign for the coming year.
We would like to see a balanced market between buyers and sellers but I expect 2014 to continue to be a seller’s market and will remain that way until we see more homes on the market.
In regards to investors I have seen forecasts going both ways. Some real estate pundits say investors will play a growing part in the housing market while others think, with fewer distress properties on the market, they will be taking a step back. Investors have made up as much of 25 percent of the residential market in the past year and will likely continue to active buyers in 2014.
Interest rates expected to rise; 30-year fixed rate expected to average more than 5 percent in 2014.Â
Still low by historical standards but an increase over the past few years.
It is always interesting to look back and think forward. This year had some major changes in our local housing market as inventory declined, prices increased rapidly and sales slowed. With more Sacramento area homeowners now with equity and fewer foreclosures and short sales, I am hopeful we will see a steadier market with more balance between sellers and buyers.
