Find Out Which Way The 2014 Housing Market Is Heading

In the year of 2013, it was a seller's market as mortgage rates were lower and there were plenty of buyers all around to purchase homes even after the waning housing bubble. So, what can be expected of the 2014 housing market? An Increase in Mortgage Rates In the past several years, the housing market has seen very low interest rates in part due to the Federal Reserve's bond buying program. Svenja Gudell, Zillow's economic director, predicts that mortgage rates may rise because the central bank will not be purchasing as much as it used to. This happened back in September when talk of the banks tapering purchases caused interest rates to rise. Though there may be a low here and there, in general she predicts that rates will go up as 2014 comes into full swing. Appreciation will Slow The home appreciation values were around 5% last year. This year Svenja Gudell, Zillow's economic director says that the rate is likely to slow to 3%. During the last half of 2013 there were a lot of home owners trying to get the houses that were on the market so bidding wars started as it became clear that it was a seller's market. The bidding got so fierce that you even had some companies that buy houses bidding against traditional home owners for some of the properties. This year will see a stabilization come to the market and for things to return to a more level playing field. When you have more stable conditions in the housing market the appreciation rate will slow, even though you will have slightly higher rates. Because of this the pool of investors that are going to be looking to buy investment properties will be lower, which will also lead to less competition overall. Lower Homeownership Rates During the peak of the housing bubble there was nearly 70% home ownership was at the highest levels it had been in many years. Because many of these people were not ready for owning a home these properties fell into foreclosure as mortgage payments were missed. This lead to a high number of foreclosures and short sales and that lead to home values quickly declining because homeownership was not seen as a profitable enterprise that it had once been. During 2014 this will lead to a lot more people renting homes instead of buying them for themselves. The level of homeownership will almost certainly drop below 70% and may well drop to under 65% by the time the end of the year hits. What It Means For You? As someone selling a home this will mean that you should not expect the bidding wars that had taken place in years past. There will still be a large investor of houses on the market but more people will be moving towards renting. This does not mean that it is going to become a buyer's market, and at best things will level out. The early part of the year will likely see a lot of buyers trying to pick up a house before the interest rates rise in the latter half of the year. For buyers, you can expect to purchase a home at a lower sales price or with more incentives than the frenzy that occurred during the housing bubble's height. As banks turn to other revenue streams, it may be easier to secure a loan. However, you may be paying more for the loan as interest rates increase. So it would be worth it to start looking sooner rather than later if you are planning on purchasing a home. This article has only spoken about the national real estate market so it only gives you a high level overview of the market. When you are looking at real estate you really need to look at the local level because there are always going to be trends specific to one neighborhood and not another.