After successfully predicting 2013, the author has predicted the market for 2014. He has predicted with some optimism for the real estate market.
Here are the predictions:
1. The affordability is slated to fall and interest rates will increase. The rates were down to 3 percent, then 4 percent, now we drift around 4.5 percent. According to the predictions, the year might end around 5 percent. But for a home buyer, each increase in the interest rate would mean more out of pocket each month. Thus, it would make things less affordable.
2. Inventory is likely to increase. Since the dip in 2009, the prices have increased enough, that most people who bought in 2005-2006 can afford to sell (which will lead to #3). This should help increase the inventory levels.
3. Foreclosures/short sales will be a small part of the market. The year 2013 ended with about 3.2 percent of the annual sales which resulted from short sales or foreclosures. He predicts that it will be even less in 2014, maybe around 1-2 percent.
4. New construction, generally single family homes, will continue to be prevalent and grow. It is believed that there are numerous builders who are snatching up land at every opportunity in Arlington. It is predicted that one will see that trend continued and more McMansions being built.
5. It is predicted that there will be more conventional loans which will be used and fewer government issued loans. However, with the recent FHA mortgage premium hike and the fact that PMI never goes away, the author suspects that anyone who CAN afford to go with a conventional mortgage will as FHA as made themselves financially undesirable.
6. It is likely that multiple offers will continue, especially in the market under $900k. It is also predicted that with affordability on the verge of decreasing and inventory just starting to increase, the “affordable” market in Arlington is really anything about $900k and under. The author also predicts that he expects multiple offers to continue into 2014 in that market, especially for single family homes. Besides this, there are pockets that will also witness craziness like Clarendon Condos and Townhomes, where availability is always slim, that will so be hit with multiple offers. In the lower prices ranges, expect to battle with builders for buildable land.
*7. Prices are slated to increase.
Here’s wishing good luck to all of the buyers and sellers in 2014. May people find the right home!