Housing market picks up momentum in 2014

1/24/2014 11:19:51 AM

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In 2013, changes in the mortgage market and improvements in many housing markets have led many to believe that 2014 will be a strong year for homebuyers and those wishing to sell. With mortgage rates changing week to week and home prices continuing to rise, the housing market will likely prosper over the coming months, despite slowing down at the end of 2013.

2013 housing market
Realtor.com recently released its National Housing Trend Report for 2013, revealing that the housing market was better off compared to 2012. In December 2013, the national median listing price for a home was 8.1 percent greater than the previous year. Heading into 2014, that is a positive sign for homeowners who lost equity in their properties during the recession. Homes were also selling faster at the end of the year, with the average age of a home on the market dropping by 5.1 percent compared to December 2012.

However, there were some signs that the market slowed down later in the year - a typical change during the winter selling season. According to the report, the number of homes for sale in December was around 1.7 million, down from November's inventory of 1.8 million. The number of days on the market rose month to month, from 101 days to 112 days. Additionally, the median price declined slightly from $197,700 to $194,500. Most real estate transactions occur during the spring and summer, when more homeowners put their houses on the market and more buyers are searching. Overall, prices and sales were still above 2012 figures, which should bode well for owners in 2014.

"As we open the new year, the first-quarter inventory figures are especially crucial as our first barometer into seller confidence for the 2014 home buying season," said Realtor.com President Errol Samuelson. "The market is still showing significant demand, but in order to have a strong home buying season, sellers need to put their homes on the market."

Higher home prices might help convince some homeowners to list their property for sale. Those that may have been waiting to sell are expected to enter the market in 2014 and boost inventory. The report also stated that demand is expected to increase in 2014, making more inventory crucial.

Credit availability
One factor that might influence those looking for a new home and first-time home buyers is the new Qualified Mortgage rule. Credit standards and debt requirements have tightened as a result, leaving some borrowers wondering if they will be able to get a low cost mortgage. While lenders are not required to follow the new rules and can still approve loans that do not meet QM standards, the changes will make lenders less liable in the case of default.

Specifically, jumbo loans may be harder to get, as  fewer options will be available to borrowers. However, the new rules will strengthen the mortgage market and make it less likely that borrowers will be unable to afford their loan and fall into default.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options.