Zillow's 2014 Housing Predictions
At the end of the year I find myself fascinated by predictions about the future, as I am sure you do too. Year end forecasts are made as quickly as they are forgotten. Do you remember any substantive predictions for 2013?
What the future holds has been been predicted by everyone from the famous Jeane Dixon to Zillow's in-house economists and gurus. While Jeane Dixon once predicted that the 1960 presidential election would be "... won by a Democrat ... [who would] ... die in office", Zillow's forecast for 2014 is significantly less dazzling. In the short, Zillow makes four predictions: a) that housing prices will rise 3%, b) mortgage rates will rise to 5%, c) borrowers will find it easier to get a loan, and d) home ownership will fall to its lowest level in 20 years. They also forecast "the hot" real estate markets for 2014; two of which are here in Florida, Miami and Jacksonville.
Not unlink Ms. Dixon's future forecasts, Zillow's predictions are pretty vague. In looking back over 2013, I think we can all agree that while the housing crisis is pretty much over, house prices have not fully recovered, there are still plenty of homeowners who are underwater on their mortgages, and there have been hot spots of rapid market appreciation in home prices (notably California), but there are still many areas of the country that have been sluggish to catch up. Unemployment has been reported to have fallen below 7%, but is that really due to an improving economy or simply under reporting the numbers since the official count doesn't include those people who are not now or cannot collect unemployment benefits and may therefore go unaccounted for.
So, I will throw my hat in the ring with some 2014 housing predictions of my own. Some home prices will go up while others will go down. Some real estate markets will experience price appreciation while other will not. Some borrows will get loans while other might not. Some buyers will continue to sit on the fence while others will eventually hop off. I know, pretty vague.
Seriously though, inventory levels will continue to decline in 2014 while demand will remain relatively constant. The pool of ready, willing and able buyers doesn't change much over time. Buyers will buy when they perceive value. So, sellers that price their home to buyers' perceptions of value will see their home sold sooner and for the most money given prevailing market conditions. Sellers have control over two things, price and condition; while buyers control price. Real estate is a commodity where the seller sets the asking price, the buyer sets the value, and the difference is the market. While more sellers will have equity in their homes than before, that isn't permission to overprice. The longer the holding period, the more likely an ower will experience appreciation. Buyers that have been been sidelined or fence-sitting may want to seriously consider purchasing a home this year since the convergence of home prices, low interest rates, and motivated sellers - the triple play - may never be as good again as it is right now.
So, what are your 2014 housing predictions? How will they stack up compared with Zillow's 2014 Housing Predictions?
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