The national average of appreciation
in home values expected for this year is 4 percent to 4.5 percent
compared with a gain of more than 11 percent in 2013, according to a
recent Kiplinger Letter forecast. The slowdown in housing gains expected
is due to rising mortgage rate expectations and fewer investors
offering all-cash deals as bargain home prices fade away, the letter
states.
"More moderate growth this year is not necessarily bad news, it
signals a more sustainable, long-term growth trajectory that will help
quell fears that another bubble is arising," says Gillian White,
Kiplinger Letter's associate editor. "Rising rates will also be helpful
in some cases, cooling overly hot markets, where cheap rates and high
demand sparked outsized price spikes."
Kiplinger forecasters predict new housing starts will top just over 1
million in 2014 – the first time since 2007. Also, sales of new homes
are expected to grow by 16 percent this year. What's more, the for-sale
inventory of existing homes will rise as more home owners see equity
again and show more willingness to sell.
Also, while affordability is declining, it will still be better than
historical standards of a median-price home costing 20 percent of
household income, the Kiplinger letter notes. In 2013, it took 15
percent of income to buy an equivalent home. With mortgage rates
expected to rise to 5 percent this year, Kiplinger forecasters predict
it will cost the average household 17 percent of their income in 2014 to
purchase a median-price home.
Source: "Housing Gains Predicted for the Year," RISMedia (Feb. 23, 2014)