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2014 Market Predictions

The national real estate market surpassed everyone’s expectations in 2013.The combination of low interest rates and inventories caused home prices to soar and helped to initiate bidding wars in most markets. Positive trends are likely to continue, but rising interest rates may inhibit some prospective buyers from purchasing this year.

Here is what we are expecting to happen in the market this year:

1. Inventory Will Return to Normal

2013 is described as a low inventory year. This means that as buyer demand increased, home sellers waited in anticipation of getting a higher price for their home. However, as we approached 2014, we saw inventory levels rise slightly, but at a steady rate. Therefore, we anticipate that inventory will continue to rise until it reaches its normal level.

2. Foreclosure Activity will Likely Decrease

Foreclosure sales will not make up a large portion of the real estate market in 2014. Year after year, since 2008, we have seen large drops in foreclosure sales. Last year alone, we noted nearly a 30% drop in foreclosure sales. As the market continues to heal, we expect these numbers to continue to decrease.

3. Mortgage Rates Are Expected to Rise

New chairmen of the Federal Reserve, Janet Yellen, is expected to follow her predecessor Ben Bernanke in policies that keep mortgage rates low. However, due to the rise in mortgage rates in 2013, and the Fed’s tapering of quantitative easing efforts, mortgage rates will continue to rise. This is not a cause for concern because home affordability is still relatively high compared to historical norms.

4. Homeowners will return to Positive Equity

The rising prices of 2013 allowed nearly 2 million homeowners to no longer be underwater on their homes.. However, roughly 7 million homeowners are still underwater. As prices continue to rise, more and more homeowners will stop being underwater on their homes and return to a positive equity state.

5. Home Prices will Rise

“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 from rising mortgage rates.” –

Predicting the real estate market is just that, a prediction. However, based on collected data and the continuation of trends in 2013 we can expect that the changes abnove will occur. If you have any questions regarding these predictions speak with an agent today or call Synergy Properties at (509) 624 – 4400.

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