Mortgage Rates and Housing Prices Expected to Rise in 2014

Mortgage Rates and Housing Prices Expected to Rise in 2014

Mortgage Rates RiseEven though 30-year fixed rates dropped in the first half of January, many analysts expect fixed mortgage rates to go up somewhat in 2014, but to top out at around 5%. What this means for buyers is that while higher than 2013’s historic lows, the rates will remain favorable and predictable for homebuyers.

What is less predictable is the potential rise in home prices. In fact, a Fannie Mae survey shows that more than 90% of the nation’s consumers believe that home prices are likely to rise and that potential buyers should start looking sooner rather than later. Nationwide, home values rose as much as 10 to 20% last year and many consumers expect at least another 3 percent rise in the coming months. One factor driving home prices up is the lack of available inventory. Many homeowners have placed their homes on the market, but according to the Fannie Mae survey, at least 33 % are under the impression that this climate is great for placing their homes on the market. If inventory rises, prices may remain stable for awhile, giving buyers the opportunity to solidify their financial situation, set a budget, gather their down payment, double check their credit report and get preapproval for a loan.

Another potential driver of home prices is the cost of materials for new homes and remodels. The aftermath of disasters such as Superstorm Sandy and various wild fires has pushed the price of lumber up more than 5 percent overall last year. Labor cost increases due to changes in many state minimum wage laws and immigration rules, as well as rising insurance costs affect materials costs too. For sellers, this means placing your home on the market now has to potential to get it sold faster, and at a moderate price increase. As interest rates go up, however, prices will correspondingly come down to adjust to buyers’ debt-to-income ratio. To set the appropriate price on your home, work closely with your professional real estate agent.

Your neighborhood comparables and the “mood” of the housing market in your area, along with the input from your agent will help you determine the best price for your situation. Remember, the mood of the market includes more than the national reports tell you. Your market is made up of a combination of the local jobs report, home inventory, interest rates, local school popularity, which neighborhoods or home styles are trending, and the community’s perceived desirability of your address. Your professional agent stays abreast of this information and works with your to set the right price for your home.

SHARE OR SUBSCRIBE TO THIS POST

What Others Are Saying

About the Author

Mortgage Rates and Housing Prices Expected to Rise in 2014

Jerry and Rachel Hsieh

In the past 13 years in real estate and at the age of 38, Jerry has had the good fortune of experiencing all of this at some point and has established himself as one of the premiere AWARD WINNING Realtors in the industry. Jerry began his career at Coldwell Banker with incredible heat: He was named the top “rookie” agent his inaugural year with over $4.5 million dollars listed and/or sold (Most 1st year agents don’t complete any transactions). Since then, his real estate career has been non-stop and he has quickly become the realtor that other young realtors talks about. In 2010, in a down market, Jerry and Rachel sold 24 homes within a 1 mile radius of the Pico/Fairfax area. They have sold over 50 homes in the Picfair Area in the past 4 years, more than any other realtor. From 2011 until now, Jerry and Rachel’s Team has grown, as has Jerry’s experience and expertise.