Housing Market Changes in 2014
The rise in the price of homes, particularly in the Marin County area, mirrors the seller’s market that is currently being maintained here in Marin. Inventory was down due to the holidays and if that trend remains steady there will be a greater escalation of home values in 2014.
Our experts predict an 8% to 12% mean increase in home value in Marin, while experts at Zillow and Trulia are expecting lower numbers between 3% and 8% nationally. Houses should start coming on the market more rapidly now that most people have returned from vacation and are anxious to get on before the springtime.
As this occurs, home prices in 2014 will likely rise more slowly than in 2013. Surpassing the expectations of many economists, the US real estate market made a robust comeback in 2013. The combination of low inventories and historically low-interest rates caused home prices to rise and even helped fuel bidding wars in the Marin market. 2013 wrapped up very much in a seller’s market with increasing home values that are expected to continue in 2014, unfortunately mortgage rates are also expected to rise in the coming year. This could dampen homebuyers’ ability to afford new homes, although plenty may be on market.
Interestingly, new inventory should force gradual stabilization in the market due to the need to accommodate homebuyers who can’t afford rising mortgage rates. Mortgage rates increased approximately 100 basis points in 2013 and are likely to rise in 2014.
The new chairman-designate of the Federal Reserve, Janet Yellen, is expected to continue the policies of Chairman Ben Bernanke, including keeping mortgage rates low by buying blocks of mortgage-backed securities. However, the Fed has considered tapering its bond-buying activity as the economy improves, which could lead to a slight increase in interest rates.
The National Association of REALTORS' Home Affordability Index, which compares home prices with income, dropped to a five-year low in 2013 as price increases outpaced income growth. If the U.S. economy begins to grow at a faster pace and incomes begin to rise, though, the affordability index will slide further from rising mortgage rates.
While no one can predict with certainty what the housing market holds in store for 2014, a constant in real estate is always that local markets vary widely in their performance. National numbers can tell a story about the economy in general, but home prices, inventory and foreclosure activity depend on local market conditions.
Contact Peter or Karin Narodny for the most up-to-date information about your local market and check back with MarinRealEstate.net or shoot us an email with any questions you may have about the housing market at team@MarinRealEstate.net!