5% mortgage rates, moderating price gains and a pick-up in new construction on tap in '14
2013 was an exciting year for housing as record low interest rates, tight inventory and rising home prices helped bolster the market's recovery. So what can prospective home buyers and sellers expect this year? Here are three trends to watch:
• Higher Interest Rates - Expect to see mortgage interest rates rise as the Federal Reserve continues to taper its quantitative easing programs, which have kept average 30-year mortgage rates below 5 percent for 44 consecutive months. 2014 will be the year that rates go back above 5 percent, but by historical standards, that's still cheap money and good for housing.
• Modest Price Appreciation - Last year, we saw year-over-year, double-digit price gains for nine consecutive months in the city. Looking ahead, as interest rates and home supply increase, home price appreciation will slow to more sustainable levels.
• More New Construction - For-sale new construction finally picked up steam in 2013 thanks to improved builder confidence. This trend should continue in 2014 amid pent-up demand and still-low mortgage rates, and will help drive the housing market throughout the year. Look for some big project announcements in 2014 with an emphasis on the luxury market.
Market Minute Teaser: Is your home protected this winter? Make sure by watching this month's Market Minute video.
We're optimistic about where housing is headed overall, and we're looking forward to another busy year for @properties as we continue to expand our footprint throughout the city, northern suburbs and southwest Michigan.
If you're thinking about buying or selling, or seeking more information on your local market, feel free to contact me at any time.
In the news:
Million Dollar Home Sales Exploded in 2013 Dennis Rodkin | January 15, 2014
Sales of high-end homes in Chicago and the suburbs went nuts in 2013. The number of homes that sold for $1 million or more was up 33.4 percent from 2012, according to figures from Midwest Real Estate Data. That's a much bigger increase than the overall market; sales of homes at all prices went up 23% in 2013.
3 Great Signs for Residential Housing Construction Peter Ricci | January 3, 2014
The latest construction numbers came out today from the U.S. Census Bureau, and they were promising: at a seasonally adjusted annual rate of $934.4 billion, construction spending in November was up 1.0 percent from October and 5.9 percent from November 2012 to its highest level since March of 2009. During the first 11 months of 2013, construction spending amounted to $828.4 billion, 5.0 percent above the the same period in 2012.
Home prices show biggest annual rise since 1988 Associated Press | December 31, 2013
Chicago-area single-family home prices surged 10.9 percent higher in October compared with the same month last year, the biggest yearly local increase in almost 15 years, according to closely watched data. The annual local increase was the highest since December 1988, according to the S&P/Case-Shiller indices released today. Home prices in most U.S. cities increased at a slower pace in October from September, as higher mortgage rates weighed on sales and dampened the housing recovery.