It is nearing the end of the year and time to take a look at recent past trends and predictions for next year! The shortest summary is that we have seen appreciation in home prices and an increase in interest rates – and both are expected to continue into 2014. The increase in interest rates reduces buying power. For example, a buyer looking at a home listed for 600k in December will probably be able to afford a home at 550k in January when the rate they were locked-in at moves up.
The news is better for sellers – due to the low inventory in Seattle and the appreciation rate a seller can expect to receive more for their home in 2014.
With the economy improving many people will have more buying power. There are predictions that some households who incorporate their children and/or parents will have the buying power to move out buy their own homes, or buy second and vacation homes.
We are also currently experiencing the largest passing of wealth from the silent generation. Baby boomers are not excited about stock and so are investing in real estate and vacation homes.
Interest rates – the federal reserve will keep near zero until the economy is stronger. Short term rates will stay low; long term rates will rise – treasury rates will rise with the 30 year rise closer to 5%.
Credit availability – FICO scores from 2007-2012 were almost impossible. FICO on closed loans will reduce…easing up of lending, makes surge of buying. Banks and lenders need to make money and so need to be creative.
Please peruse the following links:
Mortgage Rate Projections