Many economists predict that 2014 will see more real estate investors retrenching and more buyers putting roofs over their own heads. That’s not the only big change ahead. Home prices are expected to stabilize this year, while homebuilding will be more frenetic.
“The housing market has staged a spectacular recovery over the past year,” Cal State Fullerton economists Anil Puri and Mira Farka wrote in their 2014 economic forecast. “More recent data, however, point to a softening.”
Here are the top real estate trends we’re likely to see in 2014.
More inventory: You can expect to see more people putting their homes up for sale this year, as rising prices bring new equity to underwater homeowners. Other property owners also may take the opportunity to get their lives off hold and take advantage of higher home prices.
Another factor — new home construction is expected to increase this year, further boosting options for home shoppers.
New home sales to rise: Nationwide, forecasters expect the number of housing starts to range from 1.19 million to 1.25 million, up from 975,500 in 2013.
Builders are compensating for years of subpar construction levels, said Robert Denk, an economist with the National Association of Home Builders. “There’s a huge construction deficit,” he said.
An increase in homebuilding means that new home sales should go up, too.
Mortgage rates to rise: Interest rates for 30-year, fixed-rate mortgages likely will rise this year, averaging in the 4.9 to 5.3 percent range, forecasters say.
That’s still low historically, but well above rates for the past 2 ½ years. The average rate for a 30-year fixed-rate mortgage had been solidly below 4 percent since late 2011. Last summer, it spiked to 4.5 percent.
Commercial recovery remains slow: Forecasters say vacancies will drop and rents will rise this year in office buildings, shopping centers, factories and warehouses. More deals will get done, and sale prices for buildings likely will go up.
Nonetheless, the rate of recovery is expected to remain at moderate levels for commercial real estate. Commercial real estate recovery “tends to lag broader economic growth,” said Deloitte & Touche’s 2014 outlook.