HOUSING MARKET PREDICTIONS FOR 2014

2013 U.S. housing recovery led us to the remarkable price growth - prices rose up 18 percent nearly everywhere. Home prices increased in 224 of the 276 cities, according to the research made by the Clear Capital - real estate data and analysis provider. That sounds like a great news for people who wanted to sell their homes.

This upgrowth was driven mostly by investors who bought foreclosed homes and flipped them for bigger profit as they take advantage of low rates and depressed housing market. But it’s more than likely, that if prices rise they will back out from buying, says Dean Baker, co-director of the Center for Economic and Policy Research.

"An investor boom is likely to end badly," says Dean. "I'm concerned that some of the big jumps in prices are led by the same sort of housing speculation that drove the original real estate bubble."

But, making the long-term predictions seems to be the challenging task at this time. On the other hand it looks like 2014 is going to be another great year for the housing market as prices continue to rise all around the U.S.

HERE ARE TEN EXPECTATIONS FROM THE HOUSING MARKET EXPERTS FOR 2014:
1. More homes will be available
Short supply caused rapid price growth at the beginning of 2013, but it’s likely to change this year. Realtor.com reports that the inventory shortage began to soften in February. New houses construction and prices increase should bring more new and old homes on the housing market in 2014, helping inventory return to normal levels.

2. Mortgage rates will increase
According to Zillow, rates will hit 5% by the end of 2014. New Federal Reserve chief Janet Yellen will probably continue Ben Bernanke’s policy of keeping rates lower in consequence of buying blocks of mortgage-backed securities, but the Federal reserve’s bond-buying taper could put up prices higher. “While this will make homes more expensive to finance – the monthly payment on a $200,000 loan will rise by roughly $160 – it’s crucial to remember that mortgage rates in the 5% range are still low,” notes Erin Lantz, Zillow’s mortgage director. “Prior to the Federal Reserve’s 2008 decision to buy $85 billion in debt per month, the 35-year average was 9.2%, and never below 5.8%,” says Glen Kelman, CEO of Redfin.

3. Mortgages will be easier to get
“The silver lining to rising interest rates is that getting a loan will be easier,” notes Lantz. “Growing rates means lenders’ business refinance will decrease, compelling them to fight for buyers by loosening their lending rules.”

4. Home prices will rise 3%
Redfin and Zillow are expecting home prices to rise between 3% and 5% this year. For comparison’s sake, 2013 showed 5% growth nationally, with jumps of more than 20% in some hot areas. “These gains, while beneficial in many ways, were also unsustainable and well above historic norms for healthy, balanced markets,” notes Stan Humphries, Zillow’s chief economist. In 2014, home value gains will decelerate significantly because of higher mortgage rates, higher home prices, and more supply created by more new homes construction and fewer underwater homeowners.

Meantime, the Conference Board association of businesses says that the percentage of prospective home-buyers is going to be the highest since 2000, in the next six months. In addition, young people experience insufficient income and lack of jobs, so they are forced to live in their parents' houses or share apartments with roommates. Moody's experts expect the economy to expand enough to satisfy this demand and enable young people move in their own properties.

5. Fewer homeowners will be underwater
As reported by Realtor.com, rising prices helped 2.5 million landlords with underwater mortgages recover positive equity status during the 2nd quarter of 2013. CoreLogic report states that about 6.4 million homes were in negative equity at the end of 3d quarter. However, this number is going to dwindle in 2014.

6. Erosion of home-buyers purchasing power
Despite the housing market reestablishment, home affordability will decline because mortgage rates continue to rise. The real reason for this is that income levels aren’t keeping pace with the housing costs. National Association of Realtors’ reports, that Home Affordability Index fell to its five-year low. Experts’ market forecast shows that this trend will continue this year.

7. Ownership will decline
Zillow predicts, that in 2014 homeownership rates will drop below 65 percent, for the first time since 1995. “The housing bubble was led by easy lending standards and irrational forecasts for home value appreciation, but it put an incredibly high number of American households – seven out of ten – in a home, if only temporarily,” notes Humphries. That homeownership level appeared to be unstable and during the housing downturn and recovery the homeownership rate has returned to a more normal level, and now it’s expected to break 65% for the first time since the mid-1990s.

8. Americans will move
Growing prices, a reversal of underwater mortgages will make Americans free to move. But at this time smaller, more affordable homes will be chosen more frequently, than big houses in 2013. Redfin is expecting that new lending law regulations will make it harder to borrow more, so, Americans will move to less expensive areas like Portland, Denver, San Antonio, Austin, Richmond, Atlanta, Houston and.

9. Repeat Buyers Take Center Stage
According to Forbes, 2014 is tend to be the year of the repeat home buyers - investors buy less properties as prices rise: higher rates mean that the ROI falls, and there’s less room for future price growth. So, repeat buyers are going to fill this gap as they’re less dis-concerned by rising rates than either investors or first-time buyers, because the value of houses they already own has also risen. In addition, the down payment is less stressful for the repeat buyers’ budgets if they have equity in their current property.

10. Less foreclosures
The foreclosure market rise has slowed, with September 2013 the 36th straight month of year-over-year decreases in foreclosure activities, nearly 30% down from the end of 2012. The deterioration should continue with the overall housing recovery.

11. Home buying process normalization
During the housing downturn, home-buyers invested in as many as one out of every five homes in U.S., notes Redfin. The irregularity of increased inventory, higher rates, and fewer foreclosures may cause investors to step out of the buying market, giving way for regular home buyers. With the credit rules loosening, housing market begins to look more traditional. “All in all, more inventory, less competition from investors, and more mortgage credit should all make the buying process less frenzied than in 2013,” says Jed Kolko, Chief Economist and VP of Analytics at Trulia.

In 2013, homeownership was a part of achieving the American Dream for 74% of Americans – the highest index since 2010. Despite the fact that the housing market growth foreclosure for 2014 is rather disputable: national numbers can tell us about the national economy story in general, but home buying, inventory and foreclosure activities depend on local housing market conditions. eproperty