Real Estate Housing Market Trends for Spring
Despite the fact that the economy in the United States is off to a slightly rocky start in 2014, homebuyers might actually benefit from this. The ever-changing economy has allowed home mortgage rates to hit yearly lows and we are seeing these lows as recently as the first week in March. But just as the economy seems as though it is taking a downward turn, the positive February job numbers have increased mortgage rates. In spite of the ups and downs, the interest rates for homes are expected to remain favorable during the busy homebuying spring season.
In you are in the market for a home this spring, here are some of the upcoming trends in the current housing market and tips on how you can make these trends work to your advantage.
Spring Housing Trend #1: Mortgage Rates Will Stay at Historic Lows
This is not a surprise trend, but more of a projection. While mortgage rates for homes are expected to increase throughout 2014, they are still historically low and will remain low through the end of this year. The spring home buying season will see an even lower mortgage rate. The theory is simple: When the economy stumbles, mortgage rates typically ease off. When the economy sees growth, job numbers are strong and the gross domestic product increases, mortgage rates will firm. Vice-President Keith Gumbinger of HSN.com predicts that conforming 30-year fixed-rate home mortgages will fluctuate between 4.375% and 5.625% in 2014.
Spring Housing Trend #2: Housing Inventory is Lower
Low housing inventory could impact those looking to buy a home this spring. Increased home prices in 2013 and moderate price growth predictions throughout 2014 have contributed to this low housing inventory. 2014 will most likely allow sellers to put their homes on the market, but the pickings will be fairly slim in certain markets. Higher home prices mean home equity rises. As this rises, people are less afraid to sell their home at a loss. Mark Fleming, the Chief Economist at CoreLogic says he expects negative equity to continue to decrease in 2104 because only a handful of states account for the large percentage of the U.S.’s negative equity.
The good news is that new home construction will add to inventory levels and can save some real estate housing markets.
Spring Housing Trend #3: Shopping For a Home Online Grows
The internet has played a big part in the world of real estate. The National Association of Realtors reported that in 2013, 90% of homebuyers used the internet at some point when purchasing a home. Not all websites are accurate though so it is important to work with your experience real estate agent.
Recently, home buyers have taken to Pinterest to shop for homes. This social media network is one of the fastest growing social media and photo sharing websites online. Some real estate agents help their clients use Pinterest to their advantage. You can find valuable information on local schools, welcome areas and other helpful resources.
Spring Housing Trend #4: Alternatives to Conforming Loans
The Great Recession experienced risky lending practices. These days, lenders put a strong emphasis on using the “plain vanilla” mortgage product. But now, there are alternatives available for home mortgage loans. Federal Housing Administration mortgages are a good alternative for those borrowers who don’t meet the strict down payment and credit-score requirements of other loans. The loans given by the FHA are considered safe and are insured by the federal government. Another option for home mortgage loans is to apply for an adjustable mortgage rate (ARM), as opposed to the traditional 30-year fixed rate. These adjustable rates have grown in popularity when interest rates rise, but only represent a small portion of the mortgage market (about 8%).
Spring Housing Trend #5: Loan Paperwork Requirements Increase
While alternative loans such as the ARM might be a trend in 2014, so is documentation. If you have applied in the last 4 years for a mortgage, the paperwork required should not surprise you. But if you are purchasing a home for the first time in 2104, the requirements for documents could come as a big shock. Mortgage lenders will ask for extremely detailed paperwork to ensure you can repay your mortgage. The qualified-mortgage rule took place in early January 2014 and makes the collection of documentation as important as ever to mortgage lenders. Lenders can no longer approve just anyone for a loan. The rules were put in place to prevent another housing crash.
Thinking of buying or selling a home in the La Jolla area? As consistent Top Producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Working with The Daniels Group will give you with the advantage of having local experts to ensure that you have a successful real estate transaction. From buying, selling and investing to financing options and more, we have the expertise and resources to help you achieve your goals. Call us today at (858) 361-5561 or email us anytime by clicking here.