Category Archives: housing recovery

2014 Real Estate Review and Forecast

real estate growthThe economy is finally showing signs of life and real estate is following suit. Let’s take a look at what the real estate experts projected at the recent Realtor® Party Convention & Trade Expo.

Lawrence Yun, chief economist for the National Association of Realtors started with challenges facing the real estate market. The population in the United States has been growing steadily, but job creation has not, and sales of houses in relation to population have also been below normal since 2008.

Limited access to credit, fewer houses on the market, and most recently, home price increases with higher mortgage rates have subdued the real estate market. But the rise in home equity has also had a positive impact,  pushing 3.5 million homeowners above water, nationwide according to Inman News. The median gain to home equity is expected to be $40,000 over three years.

Much of the success of the real estate recovery will hinge on the participation of young first time home buyers who are having a really tough time in this economy. Yahoo recently looked at the problems facing these young people in  Why jobless millennials are killing housing. Aside from employment issues, many people aged 24 to 35 have credit scores hurt by student loan defaults which have impacted their credit scores. The Federal Reserve Bank of New York reports default rates have nearly doubled from just over six percent in 2003 to almost 12 percent last year. The good news, however, is nearly 25% of people under the age of 35 have no outstanding debt.

couple in front of houseThere are some glimmers of hope in our economic future. Growth in the Gross Domestic Product was slower in the first quarter, but with no signs of another recession on the horizon, Mr. Yun estimates GDP might grow by 3% in the second quarter. Employment is improving with the recent news that the United States economy has replaced all of the jobs lost since 2008. Job growth is expected to rise 1.6 percent in 2014 and 1.9 percent in 2015, which should cause consumer confidence to rise as well.

Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University, agrees. “Growth in the stock market and the recovery in housing, along with pent-up demand, are major factors driving the economy.”

Prosperity Take advantage of this new era of prosperity by making your next big move. With interest rates and house prices rising, now may be the perfect time to take advantage of the current favorable conditions. LWReedy.com is the perfect place to get started, or call one of our experienced real estate agents. No one knows real estate in Elmhurst and the western suburbs like LW Reedy.

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Great Expectations in 2014

As we move into 2014, we have so many things to look forward to. Improvement in the real estate market is just one of them. Last year brought many challenges, including houses that were under water, difficulties getting mortgages and a waning supply of houses for sale.

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In January of 2012, there was an 11 month supply of houses in Elmhurst. In 2013, the supply was just seven months and starting in 2014, we are down to below five months. This translates into higher prices for the houses that are selling because supply is so constricted.

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In fact, house prices at the beginning of 2012 averaged just under $380,000. At the beginning of 2013, they had climbed to just under $390,000. The average price of a house in Elmhurst as we enter 2014 is just under $410,000. That is almost 8% higher at a time when there is virtually no inflation and other adverse economic conditions persist.

The number of sales also grew surprisingly well in 2013. While sales in 2012 were rather slow, growing only 17% after losses or stagnant growth the previous years, in 2013, we started the year at 525 and ended in December at 680, a 30% increase. The number of home sales are expected to continue rising through 2014, absent any other surprises in the general economy.

# of closed units(over last 12 months-Elmhurst

Here is what the Chicago Agent is predicting for 2014.

House prices will continue to rise, although slowing as inventory picks up. This rise will move people who are currently in negative equity positions into positive territory and allow them to finally get off the fence and list their homes. As housing inventories continue to rise and general market conditions improve, mortgage rates are also likely to rise.

The Federal Reserve has already indicated it will start reducing the amount of bonds they are purchasing to keep interest rates low. Without that infusion of money into the economy, interest rates are almost guaranteed to rise affecting home affordability.

As home prices and mortgage rates rise, affording a house will start to be more difficult. In 2013, home affordability had fallen to a five year low. While credit standards are expected to loosen a little in 2014, an increase in mortgage rates and the prices of homes will make it harder for those who may be on the cusp of being able to afford a home to purchase one. Now is the time to consider purchasing and the perfect person to help is one of the experienced realtors at LW Reedy.

If you want to buy a new home, the numbers seem to indicate you will have a happier new year if you make your move now.

3rd Quarter Housing Recovery Update

This week’s Chicago Tribune Real Estate section featured an article about the progress of the housing recovery. The author, Mary Ellen Podmolik, noted that, while the recovery is not occurring as quickly as homeowners would like, it is happening nonetheless.

She reports that single-family housing starts in the Chicago area are predicted to reach or at least come close to 5,000 in 2014. While this is nowhere near the typical 18,000 to 20,000  starts, it’s better than was expected.

According to the article, the median price of homes sold in the Chicago area is up 16%. Low inventory in the Chicago area is helping to push those numbers up.  As noted in our June 2013 “How the Inventory Shortage Affects You” blog, one reason inventory is low is because many homeowners are underwater on their mortgages or are waiting until they can make more on their investments.

Podmolik reports that Chris Hucksteadt, the Chicago regional director for Metrostudy, a housing market research firm, predicts that housing starts will increase an additional 30% next year. While this is not one of the areas of highest predicted growth, there is expectation that it will be back to normal sometime in 2015.

LW Reedy’s calculations show significant growth in the Elmhurst area over the past year, comparing 3rd quarter of 2012 to 3rd quarter of 2013.

Number of single family homes sold Up 36%
Number of new listings Up 48%
Average sold price Up $54,119
Median sold price Up $36,500

While recovery is moving slowly, it is headed in the right direction. There is some concern over consumer credit scores and changes in law related to getting mortgages, but, despite those, the housing recovery continues.

What are your concerns about housing recovery? What’s holding you back from buying or selling today?

Talk to your LW Reedy agent to talk through the best timing for you and your family.

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