Experts Predict Slower Housing Market Growth in 2014
Economists and real estate experts made predictions for the housing market in 2014 at a recent summit in Orlando. The current forecast is that prices will continue to increase by 4 to 6 percent– a markedly decreased rate compared to this year. It looks like 2013 could be a tough act to follow…
Frank Nothaft– Chief Economist for Freddie Mac– doesn’t expect home prices to grow at the rate they did this year. He was one of the influential speakers at the annual summit held for Florida Realtors. Price growth is expected to be more moderate.
Please don’t take this as a bad sign. The overall outlook for the 2014 Florida housing market is definitely positive, especially for those looking to sell their home. Here are just some of the specs for next year:
- Stable home sales
- Increased mortgage rates
- Higher average sales prices
(Pessimistic view: some forecast that home ownership rates will drop to a 20-year low.)
Prices for single family homes in metropolitan Orlando outpaced the rest of Florida during this year. The median price in Central Florida was just under 175,000 for October– 28 percent higher than the prior year. Home prices jumped up by 17 percent across the Sunshine State during that same time.
Florida Realtors Chief Economist John Tuccillo predicted that home prices in and around Orlando would approach their historic level during 2014. Home values would need to increase by nearly 5 percent during 2014.
(Quick History Fact: Values for homes in Florida were cut in half following the housing bubble bust in 2007.)
Reasons for Reduced Growth
University of Central Florida professor Sean Snaith explained how uncertainty surrounding unemployment and the Affordable Health Care Act might make potential buyers a little less likely to undertake a mortgage. Still, he does predict housing starts to do well throughout Florida for at least the next four years.
Employment opportunities may be a leading deterrent in the real estate market during 2014.
Nothaft explained it as follows: “People who want full-time jobs but can’t find them and have to work part time add to the underemployment rate of 13.5 percent. That’s a large share of the market that doesn’t have the resources to buy.”
Housing Market Looking a Little More Flat for 2014
Florida is not the only state with deflated growth projected for 2014. Home prices across the U.S. are expected to grow at a reduced rate compared to this year. The Chief Economist for Zillow – Stan Humphries – thinks that average home prices will grow by 3 percent next year compared to 5 percent in 2013.
Humphries also has reason to think that homeownership will reach a 20 year low next year (below 65 percent). During the summit, he talked about how unreasonable home appreciation expectations and looser lending standards led to a level of homeownership that wasn’t feasible for the long run.
2014 Homebuyers may find that applying for a mortgage rate is easier, but the interest rate will be higher. 30 year mortgage rates are predicted to break 5 percent over the next 12 months. They fluctuated between 3 and 4 percent for most of 2013– only about half of historic rates.
Lenders are expected get more aggressive when it comes to securing home buyers searching for a loan, since the mortgage-refinance market is predicted to lose more value in 2014. Rates in any case should continue their climb back to normal.