2014 Should Be the Year You Buy a Home
Although the press frequently shares stories of economic volatility in the United States, experts with their eyes on the pulse of the real estate industry know that things have been looking up for sellers. During 2013, home prices rose 13.6 percent, according to published statistics and experts believe that those prices will continue to climb in 2014 as the market continues on its road to full recovery and more people decide to buy a home.
Prices and Interest will Increase
Continued improvement nationwide in real estate suggests that if a buyer hasn’t selected their new home yet that 2014 might be the time to buy before prices rise too much. In addition, the Federal Reserve has already started pulling back on its efforts to stimulate the economy, which means that interest rates will probably continue their slow march upward.
Experts suggest that home prices may increase by around 5 percent over the course of the year. This rate could add up to a much higher mortgage payment than if a purchase were made late in the year. Also, economists suggest that 30-year fixed mortgage rates will also inch up higher during the year. Increased home prices and interest rates mean higher costs all around for new home buyers.
New Mortgage Rules Impact Buyers
New home buyers need to consider also that changes in mortgage rules may require first-time homeowners to submit to stringent application requirements. Buyers with questions about whether they might qualify for a mortgage need to speak with a residential lender like Prospect Mortgage.
Speaking with a lender helps to make sure that a buyer doesn’t find the perfect house only to find out that there are some roadblocks that need to be cleared before a mortgage application may begin. For example, it may be quite a challenge to get mortgage funding if a family’s debt burden exceeds 43 percent of their income.
No Bidding Wars Yet
The good news for buyers is that the real estate market remains slow enough that most markets aren’t experiencing fierce bidding wars quite yet. Low rates of new construction compared to pre-recession levels have kept the market from getting too hot, so buyers remain able to find deals on new or existing construction.
Compared to the rate at which housing prices rose in the past, 2014 probably won’t match the rate of yearly increases seen before the recession; however, some metropolitan areas will probably experience faster growth than others. Also, some large cities have offered housing prices much below the averages seen at the height of the boom in 2007, but gains in the last year signal a significant turnaround.
For example, at the start of 2014, houses in Los Angeles were 31 percent below levels seen in 2007, yet average prices rose 22 percent in 2013 alone. Likewise, prices in Chicago were over 45 percent lower at the start of 2014 than they were in 2007, but saw an increase of over 21 percent in 2013. In many major metropolitan areas prices remain low, but recent price hikes mean that buyers must move fast as the market heats up.
For families, couples, or investors who have been putting off the purchase of a new home, 2014 is a prime time to make the jump into home ownership. Real estate experts and economists are in near universal agreement that the year will bring higher prices and increases in interest rates as the year progresses. Starting a home search sooner rather than later is recommended.