I hope everyone enjoyed the winter holiday season and welcome to 2014! As we launch into a new year, I enjoy reading the predictions of what's to come as I found in this article on Zillow.
Overall, they predict a 3% increase in home values, a continued gradual rise in mortgage rates, an easier time for borrowers to get mortgages and a drop in the national rates of home ownership.
I think these predictions apply in our area. I see the makings of another good year for real estate, with buyers right back out at open houses the first weekend after the holidays. While the number of houses available continues to be low, favoring sellers, I think this will be a healthy market with modest growth -- I don't foresee another year of double-digit appreciation in home values and I don't think we're in a bubble.
I'm scratching my head a bit about the prediction of falling home ownership rates, though I do see a lot of investors in the market and know that people are beginning the home buying process at a later age, so that may account for it.
And how cool is it that Boston is listed in the top ten hottest housing markets in the country?? It's been so encouraging to see how many Boston area markets held their value through the tough times, or if they did fall, how quickly they've rebounded. We're so fortunate in this area to have such a diversity of industries -- from health care to education to high tech -- that we're able to weather economic storms that have hit other areas so much harder.
And while I do know home prices here are higher than in other parts of the country, be sure to factor in how the current mortgage rate will effect your monthly payment. Rates are still historically very low (see the graph below to track the rise and fall), and as Zillow illustrates, "if mortgage rates rise to 5 percent, that means a monthly payment on a $200,000 loan will rise by roughly $160 a month." This is a point international investors understand very well, as the US is the only country that offers fixed rate mortgages, providing long-term security and the ability to build equity quickly on a well-priced property. I'm not suggesting you take on more house or mortgage than you can manage, just that you take all of the factors into account when considering a property, not only the asking price.
How about you? What do you see is in store for the real estate market this year?