Another year has gone by. America's economy is on the rebound and the housing market is mapping a steady growth as well.
The year 2013 saw a lot of activity in the real estate segment. The first half saw prices increasing, while the market cooled down a bit in the second half. Mortgage rates and prices spiked at the end of the year, bringing down affordability rates. Supply remained tight and demand shot up.
If all that mixed activity has got you confused about investing in the property market, here is your answer.
Yes. Definitely! However, there are some things that you must consider before investing all that moolah on a house.
The Good
According to a report by Yahoo Finance, 2014 will probably be a great year to buy because experts believe that the market will get a fresh supply of homes. Prices will also rise at a much slower pace than what was observed in 2013.
A Wall Street Journal report suggests that getting a mortgage is going to be easier as insurance companies get more comfortable providing loans at just 5 percent down payment.
A Forbes report forecasts after a study of trends in the last quarter of 2013 that fewer homeowners will be underwater, which will in turn reduce the number of foreclosures in the country
A latest NAHB study also revealed that 56 metropolitan cities of the total 356 exceeded forecasted levels of housing and economic activity. This is a very positive sign and experts believe that the trend shall continue in 2014.
Having said that, 2014 could be more profitable for sellers than for buyers as supply is still low and demand high.
The Bad
The Forbes report claims that though prices will rise by only 3 percent, affordability will decline on rising mortgage rates. Home ownership could also drop due to high prices and mortgage rates.
Home loan interest rates have been hinging on the Federal Bank's bond buying policy for long now. Speculations about the Federal bank cutting down on the scheme have affected the rates adversely. By the end of 2013, 30-year fixed mortgage rates touched 4.48 percent. Experts now suggest that mortgage rates will touch 5 by the end of 2014.
The Question
Although expert opinions have suggested a steady, sturdy housing market, one question still looms.
Will the supply be able to meet the demand? Low inventory has been the only factor that held back the housing market from gathering steam in 2013. All the other factors like pricing, affordability and demand rely heavily on supply.
An Alternative
While that sums up the property market of 2014, we suggest you invest using discretion. Forbes has a list of areas where you can invest without worry. Texas, North Carolina and Tennessee top the list of the most lucrative places to invest in.
Check out the complete list, here.
