Monthly Archives: December 2013

Mortgage Rate Predictions for the New Year!

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With the New Year right around the corner, experts have begun to make their forecasts about mortgage rates for the upcoming year. Here we share some of the Mortgage Bankers Association (MBA)?s predictions for 2014.

First, the MBA predicts a rise in mortgage rates during the New Year, with a 5% increase in 2014 and an average increase of 5.3% over the next two years.

This is a significant increase in rates if you look at the current average mortgage interest rate of 4.5%. This rate for a 30-year fixed-rate mortgage nears its lowest since June of this year.

Part of the reason for this anticipated increase in rates can be attributed to the Federal Reserve?s plan to ease back and eventually discontinue its bond-buying program during 2014. The Fed has been purchasing $85 billion in mortgage-backed securities every month for the last two years in an effort to keep mortgage rates low and to aid the housing market.

Since the release of this data by the MBA, the Federal Reserve has already announced that it will begin cutting back its bond-buying program by $10 billion in January 2014. It is their belief that the economy is showing enough signs of improvement to warrant a decrease in buying.

Also included in their forecast for the New Year, the MBA stated that they believe they will see at least a nine percent increase in application for new mortgages during the year. Improvements in employment figures and an increasing amount of people desiring to purchase homes will drive the market. Additionally, with home prices continuing to rise, consumer confidence has also risen. High consumer confidence levels usually lead to more home sales.

The report stated, however, that they are anticipating a 32% decrease in refinancing mortgage applications. Refinancing usually declines when interest rates rise (it?s a natural part of the process). The report also states that homeowners will likely opt for home equity second mortgages instead of cash-out refinancing. At this time, refinancing is the largest portion of all mortgage applications.

New mortgages only account for 30% of the loans issued in 2013. It?s anticipated that this will increase to 60% or more in 2014. Cash-only sales are anticipated to drop, however, as fewer distressed properties are available. The MBA also anticipates higher loan-to-value ratios as home prices continue to climb.

Architecture Trends of 2014 Real Estate Agents Will Want to Know!

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These last few years have seen a good deal of growth in the area of home construction. It?s exciting that this trend is expected to grow by a half million (or more) new homes constructed in 2014 – keep your eye out, real estate agents! What can be expected in terms of architecture during this period of growth? While trends in architecture certainly don?t happen overnight, below are a few concepts we may see pop up to a greater degree in the New Year:

Relaxation

People are now thinking of their homes more and more as a spot of relaxation and tranquility. This trend manifests particularly in bathroom architecture. 2014 will probably see an increase in more spa-like bathrooms reminiscent of what travelers may find in upscale hotels?with over-sized tubs and large walk-in showers. What a dream?

Environmentally Friendly

Correlating with an increasingly environmentally-conscious population, it?s no wonder that more and more homes are being built to play to the strengths of their region?s climate. 2014 will see more large windows installed to allow sunlight and heat into homes, and more of a particular kind of pitched roof built in areas of higher winds that reduces energy consumption and monetary costs. The term ?passive homes? may grow in popularity, as more and more people consider building houses that take ?passively? advantage of the elements.

Tradition

Some older and more sophisticated home concepts have made resurgence and are expected to gain even more popularity in the coming year. Queen Anne style and Craftsman homes, in particular, are gaining ground, as columns and large porches are once again in vogue.

Room Flexibility

It?s growing increasingly common that multiple generations live together in the same house. An interesting trend for 2014 is the construction of homes with flexible square footage that can be utilized for future needs. This space is designed to allow for privacy and to accommodate future needs. As the Baby Boomers age, planned flexibility in new homes is more popular now than it?s been in a long time.

Centrally-Located Kitchens

The traditional out-of-sight-out-of-mind kitchens are now totally relegated to the distant past. Rather, kitchens are growing more and more central to the functioning of homes, as centrally-located kitchens with room for various tasks and activities are more popular than ever. The New Year will see more kitchens built to serve both as meal preparation stations and areas for families to congregate and perform other activities.

2014 is right around the corner and bringing numerous changes within the real estate industry along with it! Buyers and sellers will be seeking homes with these amenities so keep these trends in mind and stay ahead of the game!

Real Estate Trends to Expect in 2014

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There?s been grimness at the thought of the real estate market these past several years, but all that is changing now. The recovery that?s been making headway in 2013 will continue into 2014, and the Urban Land Institute actually wrote on its website, ?The year 2014 may well be the year the real estate market ?recovers from the recovery,?? with burgeoning commercial real estate demand. Real estate trends for 2014 are actually looking, in large part, quite encouraging. Here?s an overview of some expected trends:

It?s a Seller’s Market

Home prices are now poised to please sellers more than buyers. Both parties know this, and it?s predicted that potential property owners will be quick to buy before interest rates and home prices rise.

At the same time, it?s also been argued that home prices, rather than being exorbitantly high, are actually reaching pre-recession levels, and that their rise is a symptom of a price correction. Should this be true, it may signal a normalization of the housing market that may see more moderate price increases of about three to five percent.

Inventory Changes

Currently quite a few markets are seeing an inventory shortage (hence the higher prices). However, the resultant higher prices/seller?s market may very well encourage more people to put their properties on the market, thus freeing up inventory. Consumer confidence also seems to be on the rise, and mortgage restrictions show signs of easing up, so hopefully there will be a fair bit of inventory turnover in 2014.

The Return of ?Smile Investing?

The ?smile?, or the Northeast, Southern cities, then Northwest appears to be a new hot spot for investors in 2014, and these regions will lead the recovery.

Additionally, we may be able to look forward to the more unexpected cities in these regions (i.e. not New York and San Fran) heading the real estate market in the coming year.

Millennials May Have More of an Effect on the Market Than You?d Think

This generation is predicted to have a pretty strong effect on the recovery, as many 20-somethings look to development opportunities.

Less Distressed Properties

The National Association of Realtors expects that distressed sales (so foreclosures and short sales) will fall to about 8% of the housing market by the end of next year, which contradicts fears earlier in 2013 of a looming boom of shadow foreclosures. This ease in distressed sales and the presence of distressed properties is indicative of a healthier housing market.

Things seem to be looking up in the real estate market. Definitely looking forward to ringing in the new year!