2014 Economy Heats Up

Affordability is expected to take a hit next year as home prices and interest rates continue to head up as the 2014 economy heats up.
The upbeat real estate market news we received in 2013 presents some challenges for the year ahead. An influx of buyers last year helped strengthen housing appreciation, which in turn led to greatly improved consumer confidence. The results was 5.1 million home sales, the best year for real estate purchases since 2007.
But 2014 will be different, with sales volumes gains expected to be small at best, because of rising interest rates and home prices, NAR Chief Economist Lawrence Yun says. But there’s an upside, too: the continued growth in the economy, which, while, modest, has stayed on track. The resulting addition of more than 2 million jobs each year should provide a boost to housing markets. On the commercial side, rising rent growth and declining vacancy rates bode well for the office, industrial, retail, and multifamily sectors.
Yun says lenders could promote stable markets next year as they look to purchase-money mortgage loans as their next big growth area to compensate for a shrinking body of business from refinances, which will drastically fall as interest rates rise.
By Robert Freeman (REALTOR Magazine)
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