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2014 What Is Going To Happen
What's in Store for 2014The National Assocation of REALTORS Chief Economist Lawrence Yun recently commented on where he sees our nation's real estate market in 2014. CLICK HERE to read the full article.
Yun predicts home prices to rise 6% in 2014, nationally. He also predicts that we will see interest rates climb to 5.3% (we are currently hovering around 4.0%) and the number of homes sold to stay relatively flat in 2014.
Here are my thoughts on what I think will happen locally. We have returned to a more standard inventory level. At the beginning of this year we had unprecedentedly low inventory, hence the boom in new construction and the increase in median sales price. However, since January our inventory has went up almost 60% in Ada County. This is a pretty sizable jump but still has our inventory levels below what we consider normal. I see our inventory staying fairly close to where it's at right now through 2014 with some moderate fluctuation throughout the year.
Much like Yun, I predict interest rates to go up. They have been artificially low for such a long period of time that up is the only direction they can go. The government is the biggest buyer of mortgage backed security bonds (MBSB). They have said on many occasions that they want to slowly pull out of that market. So, in order for the private sector to find MBSB as viable investment, interest rates have to go up.
Yun predicts home values to increase roughly 6% in 2014. I don't think he is too far off when I look at our Treasure Valley.
There were a lot of home sales this year but 2014 will be less. Sales have slowed dramatically this fall due to the fact that so many people purchased the first half of this year. 2014 sales won't be dramatically less than this year but I think we'll see new construction soften, a modest increase in median sales price, "average" inventory levels and increased interest rates.
What to take out of this? Most of these statistics are inconsequential...except one. Interest rates. Interest rates will go up. Period. If you are one of those buyers waiting for a better interest rate in 2014, don't hold your breath. My advice to any buyer out there is to buy and buy soon. If you are a seller looking to sell - get ready now. I would have your house ready to sell and on the market by March 1st. The lower the interest rates are the more it benefits the seller. By the second quarter I think we will see some interest rate increases.
Jared has been practicing residential real estate in the Treasure Valley for 11 years specializing in move-up buyers and sellers in Boise and Meridian. Currently Jared hosts, “Boise Real Estate Rad....
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