Housing Market Will Improve in Second Half of 2014

The recent decline in the number of short sales and foreclosed properties has resulted in a drop in investor purchases and an increase in housing prices. The pace of sales, prices, foot traffic and inventory all point to steady progress in real estate during the last half of 2014. After an abysmal first quarter that drove a disappointing first half, housing will be playing catch-up for the rest of this year.

Housing activity has dropped when compared to 2013, where there was high investor activity, double-digit price appreciation, and near-record inventory lows. Despite this drop, there’s a big difference between last year’s abnormal real estate market and the market now, which is beginning to look more balanced.

 

One factor very promising for today’s home buyers is that the number of new homes that have been built in recent years, and that are being built now, is much too low to keep up with population growth. Historically, new home starts averaged approximately 1.75 million per year. Yet, only 1 million homes were built in 2013. 

 

The U.S. Census Bureau projects the adult population will grow by roughly 2 million people per year over the next two decades. With the projected rate of population growth, the demand for housing and lack of available inventory will likely raise prices significantly in the near future.

 

In retirement areas such as Florida, the appreciation opportunities are even greater, as 75 million baby boomers are expected to retire in the next 15 years.

 

Home buyers that are fortunate enough to qualify to purchase today will enjoy the benefits of substantial appreciation, coupled with low mortgage payments resulting from historically low interest rates.