Predictions for 2014

I have a few predictions for 2014. There are some real estate experts and stat resources that I look into to gather my opinions on what to expect ahead.

Housing Inventory: Several factors affect housing inventory levels. The economy is improving and improved consumer confidence has brought more buyers back in to the market. Short sales are rapidly going away because they do not exist in an inclining market & foreclosures are down. New construction still has not caught up to demand so inventory challenges will continue through 2014. Low rates are still here and attractive to investors from hedge funds and private equity firms that are purchasing real estate for rentals. All these factors will continue the housing shortage we have seen in 2013 through 2014.

Interest Rates: The Fed intends to keep the funds rate near zero until the economy is stronger. This will keep short term rates low through 2014. Currently rates are around 4.45% and could rise to 5-5.5% by the end of 2014.

House Prices: Last year represented the strongest year-over-year increase since 2005. Many areas are finally out of the negative equity from the boom levels of 2007. I predict that home prices will increase another 3-4% in most areas. In some more desirable areas with low inventory another 5% is possible for 2014.