What happened in 2013 with the real estate market? What will happen in 2014? We’ve got the answers.
Increase in Prices and Sales
In 2013, home prices rose faster than they have since the housing boom. Nationwide sales were on pace to reach 435,100 new homes sold in 2013, the most since 2008. Annual nationwide existing home sales were up with approximately 5.1 million, the highest total in seven years and 10% higher than 2012’s total of almost 4.7 million.
Financial / Banking
Nationwide bank failures dropped again dramatically to just 24 in 2013, down from peak of 157 in 2010. Refinance activity also dropped dramatically as interest rates rose. Delinquencies and foreclosures continued to fall. In addition more than 3 million homeowners returned to positive equity in 2013. Government began easing back on its bond buying and stated that its continuance will be data dependent, which could result in high mortgage rates in 2014.
Washtenaw County Improvements
Average sale prices of $249,294 – up 18% over 2012 and up 37% over the recent low in 2009. The average days on the market was 47, which is down from 69 in 2012. Countywide 43% of homes sold at or above their asking price – up from 33% in 2012.
What’s ahead in 2014?
- New Federal Reserve Chairwoman Janet Yellen and Vice Chairman Stanley Fischer are excellent replacements and are likely to be dovish.
- Tapering continues and is scheduled to end by 01/01/2015
- Short-term rates remain at zero until 01/010/15 or as long as unemployment is “elevated” and inflation is “low”. Thus, low but rising interest rates with end of year 30-ryear rates at 5% to 5.25%
- Trillions in household net worth recovering and now at a new record level means more income to spend elsewhere
- Consumer confidence, while historically low, is up
- No recession is in the card- Leading Economic Indicators for the USA at the highest level since Great Recession
- Household formation for first-time home buyer in the 25-34 age group is rising
- Residential housing permits are expected to continue their climb
- FHA lowered state-wide maximum loan limit to $271,050.