What trends should you be on the lookout for in 2014?
The housing market may have made considerable strides in 2013, but according to Trulia’s housing barometer, it still has some ways to go.
Not only are existing-home sales still 21 percent below their normal pre-bubble level, but home prices are still 29 percent down, while delinquencies/foreclosure rates and new home starts are respectively only 59 and 36 percent back to normal.
So, with all this room for improvement, what trends should we be following in the coming months? Courtesy of some rockin’ research by Trulia, here are three things to keep in mind:
1. Homebuying Easing Up – In quite a few housing markets in 2013, the homebuying market was more frenzied than it had ever been since 2008, with homebuyers competing with deep-pocketed investors for an increasingly dwindling supply of turn-key-ready properties.
However, 2014 should be a bit less frantic, according to Jed Kolko, Trulia’s chief economist. Not only is inventory expected to increase, but with both home prices and mortgage rates on the rise, there will likely be less competition from investors; and lending standards are even expected to loosen.
2. 2014: Year of the Repeat Buyer – With investors moving away from center stage, what group of consumers can we count on to carry the housing-demand torch next year? Sadly, it won’t be first-time homebuyers. Not only does youth employment remain thoroughly horrendous (it’s only 23 percent back to normal, which is down from 28 percent a year ago), but down payment requirements remain a hurdle.
Therefore, it’s likely that repeat buyers will lead the charge. Because the home they currently own has risen in value since 2012, and because they lack the bottom-line concerns of investors and the down-payment barriers of first-timers, they have an easier access point to the market.
3. Urban Apartment Heaven – Though single-family home rentals grew by 32 percent during the recession and resulting recovery, it’s unlikely the trend will continue. Again, investors (the primary force behind the single-family rental movement) are buying far less homes, and with loosening credit standards, single-family renters will be able to own again.
Therefore, the rental landscape will shift to urban centers. Not only is multifamily construction still quite high, but again, young adults are still having extreme difficulties finding work, and because of that, they’re much more likely to rent when they move out of their parents’ homes than buy.