1. Mortgage Rates Are Expected To Rise
Mortgage rates increased approximately 100 basis points in 2013 and are likely to rise in 2014. 30-year fixed-rate mortgages last week averaged 4.48 percent. At this time last year 30-year fixed-rate mortgages averaged 3.35 percent.The new chairman-designate of the Federal Reserve, Janet Yellen, is expected to continue the policies of Chairman Ben Bernanke.The Federal Reserve last week said it would in January start tapering economic stimulus that has helped keep interest rates low. Rates are expected to be above 5% by year’s end.
2. More Homeowners Will Emegre From Underwater
Rising prices helped 2.5 million homeowners who were previously underwater regain positive equity status during the second quarter of 2013. However, approximately 7.1 million homes were still in negative equity at that time and an estimated 10 million homeowners, or about 21.1% of all homeowners with a mortgage have less than 20% in home equity. The good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory.
Homeowners who purchased in 2006 and 2007 at the peak of the market and thus those who experienced the sharpest price declines are now nearly in positive equity. Moderate price growth in 2014 will help to further close this gap.
3. Foreclosure Activity Is Expected to Slow
Foreclosure sales are likely to play a minimal role in the housing market in 2014. September 2013 was the 36th consecutive month with a year-over-year decrease in foreclosure activity. Foreclosure inventory has dropped to multi-year lows, down nearly 33 percent since the end of 2012. Foreclosure starts were down 39 percent in the third quarter of 2013 to the lowest level since the second quarter of 2006. In Wallingford there have been 8 bank owned forclosures reported year to date, accounting for 4.2% of sales.
4. Further Declines in Home Affordability Are Expected
The National Association of REALTORS®’ Home Affordability Index, which compares home prices with income, dropped to a five-year low in 2013 as price increases outpaced income growth. If the U.S. economy begins to grow at a faster pace and incomes begin to rise, though, the affordability index will slide further due to rising mortgage rates.
Wallingford PA Real Estate – Wallingford, PA 19086
