Many people in the housing industry are wondering what 2014 will be like after a very eventful 2013. And, according to a recent article in the USA Today, here is what is expected in the upcoming year.
Probably the #1 main topic focuses on the price of homes and what is going to happen with them in 2014. In 2013, home prices were the biggest highlight and there should be more good news in the new year. The USA Today article said that economist John Burns looks for a 6% gain in home prices for 2014, while Zillow forecasts a %3 rise.
The housing experts are saying that home prices will most likely rise a little more slowly due to more homes coming on the market. In addition, fewer investors bidding for homes and the higher ownership costs will cause less housing affordability.
Trulia economist Jed Kolko says that the housing market remains 4% undervalued when compared with other economic fundamentals, including consumer incomes and the cost to rent. According to Kolko, based on the same data, home prices were 39% overvalued at their peak in 2006.
Another main topic is the existing home sales. The National Association of Realtor (NAR) data shows that home sales have begun to slow; in November, they were actually down for the first time in 29 months.
This was due to the higher interest rates and also the lower supply of homes for sale. But, according to Paul Ashworth, Capital Economics economist, this doesn’t mean the housing recovery is stopping because home prices and housing continue to improve.
According to the article, the existing home sales, which came in at a 4.9 million seasonally adjusted pace in November, are expected to be about 10% higher in 2013 than 2012 and stay approximately the same at 5.1 million in 2014.
In addition, new home sales, which make up a smaller part of the market, have more room to grow. New home sales were up 17% from a year ago and hit an annual pace of 464,000 in November.
Finally, another main topic is housing construction. November’s data showed an improvement, as housing construction topped 1 million on an annual basis, according to the Commerce Department. This was up almost 30% from a year earlier.
And, according to Goldman Sachs Asset Management, even though construction probably will not return to normal yet this year, it will definitely strengthen enough to be the “main” driver of the housing recovery as home prices gains shrink. This will bring about 300,00-500,000 jobs in the construction business over the next three years, which is great news.
If you have any questions about the housing market for 2014, please give me a call and we can discuss all of your needs and concerns.