Posted on Jan. 12th, 2014
According to real estate specialists, the prices of homes on the market will keep on rising during 2014 but still may not reach the 2013 levels. According to the National Association of Realtors (NAR), in the end of 2013 homes in the USA were 11.3% more expensive than in 2012. NAR expects the average price of existing homes will reach $207,200 (up with 5.3%) during 2014, while the new homes will jump to $276,700 (up with 5.1%).
2013 almost scored a record in the sales of existing condominiums and homes – 5.29 million sales marked an 11% rise. According to NAR, we will see a similar level of sales during year 2014. The statistics show us that on national level there was an increase in the sales in every region and every price category (except one), which means that the recovery of the home market really is broad-based.
A glimpse at the economic outlook report by Freddie Mac tells us that the prices of homes are likely to go up with 5-6% during this year. Moreover, although the inventory is still tight and limits the prospective buyers, Freddie predicts a rise in sales, too. A good news is that the outlook report predicts about 1.15 million new houses to appear (or at least to start appearing) this year, which means more than 700,000 new work places and a significant economic growth.
Finally, Freddie predicts a serious shift from the existing refinance-based mortgage market this year. According to him, first-time buyers will be those dominating the mortgage origination – something that happened last in year 2000.
It appears that the housing recovery resulted in the rise of home prices almost everywhere. Clear Capital, which deals with data and analysis in the real estate sector, found out that 225 of 276 cities recorded a rise in the prices in 2013. According to them, this year prices in the USA will reach the historical average with a rise of 3-5%.
Moreover, according to data by the Conference Board – non-profit association dealing with businesses, year 2000 was the last time so many people intended to buy homes in the next half a year. And even the demand among young people has risen up – apparently, they are going to deal with the insufficient income and leave their parents’ home.
According to Moody’s Analytics, the economic growth this year will be more than enough for young people to manage to move out. The first step, of course, is renting, but the problems related to renting – higher rents and less places to rent – will make them consider buying new homes.
Building Equity Maintained by Homeowners
Apparently, the Great Recession did not affect the income of those who earn from dealing with real estates. According to the data, a median-priced home with 30 years of mortgage in 2004 would now provide its owner with $28,114 equity on the average. The median-priced home bought in year 2012, however, would give you $23,000 in equity now.
Even the buyers in 2006, who suffered by the highest level of decline of prices, are almost on the positive side when it comes to equity.
Those homeowners, who bought their homes in 2006, saw their value go down and owed about $28,200 above the real average value of the home. However, in the end of 2013, the prices rose, so now the same owners would owe only about $4,700, according to NAR. This is not the case with the byers in 2007 – they now have positive home equity.