Housing Predictions for 2014: Sales Will Surge

Many housing pundits are calling for home sales to do slightly better in 2014 than they did in 2013. To the contrary, we strongly believe that home sales will skyrocket with increases of 10-15% in 2014. Here are the three categories of buyers we believe will create this strong demand.

The First Time Buyer

The Urban Land Institute recently released a report, Emerging Trends in Real Estate 2014, projecting that 4.48 million new households will be formed over the next three years. Millennials will make up a large portion of these new households. With the economy improving, we believe they will finally be moving out of their parents’ homes and, when they compare renting versus buying, many will choose homeownership.

The Move-Up Buyer

Over the last several years many homeowners were trapped in their home by negative equity. This prevented them from moving up to the home of their dreams. Zillow has just revealed that home equity increased by $1.9 trillion dollars in 2013 an increase of 7.9% in the last twelve months. With home values rising, this pent-up demand will finally be released and move-up properties will be in high demand.

The Immigrant Buyer

No one knows what will happen with immigration reform. However, we do know what such reform would have on housing demand. A recent study released by the Immigration Task Force of the Bipartisan Policy Center (BPC) found that immigration reform, if passed, would dramatically increase demand for housing units; increasing residential construction spending by an average of $68 billion per year over the next 20 years.

We realize that our projections are based on three situations that are still uncertain. However, we believe that these issues will come to fruition and thereby dramatically increase demand for homeownership.

Do you have questions about the Seattle area housing market? Give us a call, text or email. We would love to answer any questions you may have.

-Steve and Sandra

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
Seattle-Northwest
122502 Greenwood Ave N
Seattle WA 98133
call/text: 206-769-9577
email: stevehill@windermere.com

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Posted on January 6, 2014 at 4:15 pm
Steve Hill | Category: Housing Market | Tagged , , , , , , , , , , ,

The top 10 hottest housing markets for next year

For the upcoming year, Zillow has predicted that ten markets will soar above all the rest, and we are surprised and pleased to see that not all ten happen to be on the coasts, unlike other lists we’ve already seen generated for 2014.

In addition to outlining the 2014 housing market predictions, Zillow predicts home values will rise by 3.0 percent, mortgages will be easier to get, and rates will reach 5.0 percent before the end of the year. Additionally, they are predicting that homeownership rates will fall to their lowest point in nearly two decades.

Zillow predicts the following ten housing markets are likely to experience the heaviest demand for homes alongside increasing home values:

  • 10. Boston, MA
  • 9. Portland, OR
  • 8. San Diego, CA
  • 7. Jacksonville, FL
  • 6. Raleigh, NC
  • 5. Miami, FL
  • 4. San Jose, CA
  • 3. Austin, TX
  • 2. Seattle, WA
  • 1. Salt Lake City, UT

Home values will rise nationally

Dr. Stan Humphries, Zillow chief economist notes that “In 2013, home values rose rapidly – about 5 percent nationwide and more than 20 percent in some local markets. These gains, while beneficial in many ways, were also unsustainable and well above historic norms for healthy, balanced markets.

Homeownership levels will fall

Despite values rising, Dr. Humphries notes that homeownership will likely hit 20 year lows in 2014. “The housing bubble was fueled by easy lending standards and irrational expectations of home value appreciation, but it put a historically high number of American households – seven out of ten – in a home, if only temporarily.”

“That homeownership level proved unsustainable and during the housing recession and recovery the homeownership rate has floated back down to a more normal level, and we expect it to break 65% for the first time since the mid-1990s,” Dr. Humphries concluded.

Curious about the value of your home? Give us a call for a no-hassle, no-obligation market analysis of your home!

-Steve and Sandra

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
Seattle-Northwest
122502 Greenwood Ave N
Seattle WA 98133
call/text: 206-769-9577
email: stevehill@windermere.com

Check out these useful Home Search Apps:

Windermere for iPad
Windermere for Android

Check out these useful links:

BrennerHill.com
Best In Client Satisfaction
Seattle Real Estate Statistics
Windermere Housing Trends Newsletter

Our Preferred Lenders

George Runnels
Washington First Mortgage
WaFirstMortgage.com
call/text: 206-604-4545

Jackie Murphy
Cobalt Mortgage
CobaltMortgage.com
call/text: 425-260-6834

Posted on December 11, 2013 at 3:00 pm
Steve Hill | Category: Housing Market | Tagged , , , , , , , , , , , ,

Housing market heats up — and it’s just getting started

If you tried to buy a home in Phoenix a year ago, you probably would have been able to land it for well under the asking price.

Those days are gone. In a city that was hit hard after the housing bubble burst in 2007, you’re more likely to encounter a bidding war for that split-level ranch on the cul-de-sac you had your eye on.

Prices have leapt 20 percent in the last year in Phoenix. Real estate agent Tucker Blaylock says they will keep rising as long as interest rates remain near historic lows, thanks to the Federal Reserve.

“You can borrow money so cheap it’s really pushing prices up,” he said. “A year or two ago, a buyer could bid 20- or 30-thousand under the list price and have a shot at getting it. Now sellers want list, or in some cases they get multiple offers and it’ll go above list price.”

It's not just Phoenix. The list of the hottest markets reads like the housing boom of the mid-2000s. In the past 12 months home prices are up 19 percent in Las Vegas. California hot spots include San Francisco (up 25 percent), San Diego (up 17 percent) and Los Angeles (up 19 percent.)

Nationwide, that momentum is dragging potential buyers off the fence, which is in turn feeding the higher prices, the experts say. Despite rising mortgage rates, demand for homes is surging with little sign of the bubble bursting anytime soon.

The latest monthly data from the widely followed Case-Shiller index showed home prices in May jumped 12.2 percent in the past year — the biggest yearly jump since March 2006 — supporting economists' views that the housing sector is one of the brightest spots for the economy.

In a handful of metro areas, housing is looking downright “bubbly,” according to Robert Shiller, co-founder of the index. “The cities that bubbled in the past are bubbling again,” he told CNBC. “To me, it’s seems partly psychological. They’ve seen it before and they’re ready for it again.”

But unlike the historic mid-2000s bubble, there are signs the latest price surge is more sustainable. One is that the mix of buyers is shifting from bottom-feeding investors to homeowners who plan to stay awhile. In Phoenix, “hot money” investors are cooling to new purchases even as prices keep rising, said Blaylock.

“It scares the guys who have been flipping stuff in the 100-to 200-thousand-dollar range that now they’ll have to pay 350,” he said.

(Read more: Home prices make biggest yearly jump since 2006)

And unlike the last bubble, mortgage lenders are much choosier when reviewing loan applications than the days when just about anyone with a pulse was approved.

Prices are also rising because the supply of homes for sale is getting tighter. Banks have shed much of their backlog of foreclosed properties. A four-year drought in home building, which is now beginning to ease, cut deeply into the supply of new homes.

One negative is that increasing mortgage rates could throw cold water on some of the hot markets. The average fixed rate on a 30-year mortgage hit 4.31 percent last week, up nearly a full percentage point since January, according to Freddie Mac.

“Once you put a five in front of it, it’s a different ballgame,” said Blaylock. “People have been so trained to this 3-5 (percent) range that five seems high.”

But so far, the home sales data indicate that home buyers are taking the relatively higher rates in stride, especially investors with a short-term horizon. New home sales rose 8.3 percent in July, as builders reported continued strong increases in foot traffic. That put the pace of June sales nearly 40 percent above the same month last year.

“Higher mortgage rates don’t appear to be denting new home sales,” said Paul Diggle, a housing economist with Capital Economics.

Video: Robert Shiller, co-founder of the Case-Shiller Index, breaks down the latest numbers on housing and which cities are "bubbling up."

That may be in part because, despite the recent jump in prices and mortgage rates, homes are still more affordable than they’ve been in decades, based on an index calculated by the National Association of Realtors. The index, which combines the impact of changes in home prices, mortgage rates and household incomes, has fallen sharply this year but still stands well above levels that typically have dampened home sales in the past.

While housing remain affordable by historical standards, the current recovery has left a large segment of U.S. households behind, including the more than 7 million whose homes were seized in the wave of foreclosures that followed the frenzy of reckless mortgage lending in the middle of the last decade.

The home ownership rate, which surged to 69.2 percent in 2004, has fallen back to 65 percent as of the second quarter, according to the latest Census data released Tuesday. The rate, now back to levels last seen in 1995, is expected to continue falling as more families move through a large backlog of pending foreclosures.

Many of those families are expected to remain renters, which has driven strong demand for new multi-family housing and strong rent increases in many markets.

To be sure, a continued rise in mortgage rates will eventually slow the climb in home sales and prices. But in the short term, the strong home price momentum is feeding on itself as buyers sitting on the sidelines fear paying higher prices by waiting.

“At least for the short term (prices) will probably continue to go up,” said Shiller. “For a flipper now who can get out in a year, it seems to me like a fairly safe bet.”

© 2013 CNBC LLC. All Rights Reserved

Seattle Real Estate Statistics

Curious about your home's value? Give us a call, we are happy to provide information.

Steve Hill and Sandra Brenner
Windermere Real Estate/FN
206-769-9577
 

Posted on August 12, 2013 at 3:27 pm
Steve Hill | Category: Housing Market | Tagged , , , ,

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