While we can never know for sure how the market will turn, we can look at existing tendencies in order to gain insight to the impending state of home values.
There will be a slower rise in prices and property values
While prices have been on the rise all over the country, the National association of Realtors has predicted the rate to reduce to 3.5% and Freddie Mac says it could go to 4.9%. Since many U.S. cities have seen rapid value growth, this slower gain can put pressure on their individual markets. The upside is that many other areas of the country have seen property values return to pre-bubble levels. This means good things for homeowners who were able to hold on to their homes.
In the rental arena, we are seeing rents leveling off in most areas. This is relieving financial burdens on renters. Allowing many renters to start saving money for their down payment to buy homes. Many will be purchasing for the first time and several others will buying after foreclosure, bankruptcy or short selling an old home.
It will be steady as she goes for existing home sales
Increasing interest rates will have an impact on existing home sales, as higher interest rates will mean buyers have less purchasing ability. With this in mind, Interests rates are still relatively low and job growth is strong. This has lead to more serious buyers on the search for new homes. Inventory has continued to be low as many homeowners are still hesitating to put their homes on market.
As a result, the new home industry has taken off. New homes’ sales have been steadily climbing. These new homesites are offering buyers great options for reasonable prices. They are snagging clientele with slogans like “New is better” or “Build your home your way.” For these reasons, new home sales will continue to lead market. They are expected to increase over 8% nation wide.
The future of mortgages
While we have seen an increase in rates recently, they still remain uncustomarily low. According to Freddie Mac we should expect to see an increase in new mortgages for purchase of homes. On the other hand, they stated that refi loans will be falling off sharply. This situation will create a purchase-oriented home market.
As home values begin to creep up and homeowners see more equity in their properties, we could also see an increase in the home equity loan and line of credit arena. This would give borrowers the opportunity to use the money in their own homes to make home improvements or pay off other higher interest debts.
Fear not hesitant buyers. Many experts strongly believe we will soon see a buyer’s market as more and more homeowners begin to list their houses and new home builders continue to add more inventory to your local markets. If you have not found your dream home yet, chances are it will soon be for sale.