As we approach the end of the first quarter for 2014, many question what the housing market will do during the remainder of this year. Well as most of us on the West Coast have already seen, home prices have begun to rise, with many California counties already experiencing double-digit appreciation numbers last year. The economists are expecting this trend to continue with interest rate increases of course soon to follow. But with so much sales volume being driven by investor’s last year, what will this mean for the affordability of potential buyers looking to secure a primary residence?
Consumer confidence in the real estate market seems to be back with approximately 5.1 million home sales last year. This was the best we’ve seen since 2007. But now listing inventory in most areas seems thin which could slow things down. Buyer demand remains strong, and currently interest rates remain at historic lows.
The National Association of Realtor’s research department projects a growing GDP, an increase in existing home sales, and a median home price for the US to exceed $200,000 this year and continue to grow into 2015. However, with this forecast they also anticipate the average interest rate for a 30-year fixed mortgage to reach 5.1% this year and grow to 5.8% by sometime next year. And much of their research shows that housing affordability peaked in 2012.
So if home sales are going to continue to increase, interest rates are forecasted to rise, median home prices are on the rise, and affordability is expected to decrease, that tells me that the time to buy is NOW! Additionally, the economy seems to be doing well along with the job market strengthening. It’s been eight years now since our housing market crashed, and for those of you that felt like you were missing the boat back in 2004 and 2005 when you were getting priced out of being a first-time home buyer… well be glad you weren’t on that boat; because it sunk and it sunk fast. But here we are almost a decade later and I personally feel that whether it’s your first home purchase, a resort 2nd home, or just an investment property somewhere, this year seems like the opportunity to secure a real estate investment that will set you up for the future.