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Positive Housing Market Outlook for 2014

by Harrison Stowe on December 23, 2013 · 4 comments

  
Housing Outlook

While the housing rebound was swift with little signs of flagging from August 2012 to August 2013, there were clearly some areas of concerns throughout Q3 of this year. Mortgage rates began to rise after resting at record lows, and purchase rates slowed in some areas. High demand housing markets risked hitting a tipping point after property values jumped so sharply that some prospective buyers shied away.

Granted, there were also newfound areas of hope. The housing market’s strength was spilling into adjacent sectors. Home improvement and home supply companies saw earnings break far past analyst projections. With this came stop-start booms in new construction, and homebuilder companies often reported earning gains that preceded these earning gains from home supply providers.

This latter phenomenon may repeat itself through the first half of 2014. According to new analysis from MarketWatch, new home construction throughout the U.S. jumped to the highest level since early 2008. Additionally, figures drawn from the U.S. Department of Commerce indicate that new housing starts rose an exceptional 22.7% in November. As an adjunct to this, the MarketWatch story also points out that a survey compiled by the National Association of Home Builders and Wells Fargo notes that builder confidence has begun to rise in tandem with general homebuyer confidence.

General health in the housing market, as has been apparent throughout 2013, seems directly anchored to jobs growth. The latter half of 2013 was marked by uneven jobs reports, but the November 2013 report was one of the most promising releases of the year. Young buyers, the housing market’s largest but also most hesitant demographic, need to have assured financial and professional security before they commit to purchase and mortgage negotiation.

So What’s the Takeaway?

Despite moments of faltering during the second half of 2013 (especially at the close of the summer season), the housing market seems set for a healthy new year. It seems we’ve all been holding our breath (or, to use another image, pinching ourselves) over concern that the housing market could scurry back down its the economic hole. Apprehensions around a second bubble – even regional ones – emerged persistently throughout last year.

I hope I’m not being prematurely optimistic, but the rise in new construction coupled with the slow-but-steady creation of enduring jobs throughout a diversity of sectors has set a good foundation for the housing market in 2014. Naturally, metros with healthy economies and more active job growth will reap the fullest benefit of current trends. Either way, the housing market will likely emerge on only steadier legs into the New Year.

Photo: Ron Henry Photography

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{ 4 comments… read them below or add one }

Gerald Harris December 23, 2013 at 9:08 am

This is exactly what is starting to happen here in Charlotte NC. Jobs are being created so you have somewhat of a boom that is happening. People from More expensive markets like California, New York, New Jersey are coming this way due to job growth and affordability. Now if interest rates rise too much it may caution some buyers

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Steve Johnson December 23, 2013 at 9:38 am

I agree that interest rates may pose more of a challenge if they go up, but they are still incredibly low over time. I think the strict lending guidelines are keeping many prospective buyers off the table because they either have poor credit or too much debt, much of our generation having huge student debt. I’ve seen a large number of people offering homes on a cash for deed contract or similar but these folks know only just enough to be dangerous with seller financing. I’d love to hear counter arguments but I wouldn’t hesitate to say that seller financing will be a much more preferred acquisition method for new home buyers than seen before.

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Kevin Yeats December 27, 2013 at 2:37 pm

I have to agree with Steve. It is the poor credit scores driven by sub par balance sheets and inadequate income that will limit future homebuyers.

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Robert Adams December 30, 2013 at 11:02 am

It will be interesting to see if the Las Vegas market moves towards a buyers market in 2014 or if inventory will go back down. Over the last 6 months inventory has been skyrocketing until December. Inventory levels actually went back down slightly. It will be interesting to see if the inventory increases again after the first of the year or if it will decrease back down and keep us in a seller’s market.

Best Regards,
Robert Adams

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