It’s that time of the year when business experts posture and predict what 2014 will bring. One of the areas that is open to constant debate is the real estate market. Will sales numbers increase? Is inventory going to come back? Will interest rates stay low? The questions abound, and the answers vary from market to market, town to town and state to state. Most agree that we’re headed in a much more positive direction, and we’ve not seen the rising numbers level off just yet.
Based on industry-wide data from the Urban Land Institute, and considering a historical perspective of our local markets, the following real estate trends seem to be on point for 2014, and beyond.
All text by Debi Benoit, principal at Benoit Mizner Simon & Co.
Real estate movers and shakers are increasingly interested in where Gen Y is headed, since it holds a lot of promise for the communities of the future. Since many neighborhoods are seeing increased economic activity in the real estate sector led by this generation — developers are taking notice.
However, this same group isn’t yet forming new households, and they’re not buying as many homes as their parents’ generation were at their age. Many are saddled with student loans and don’t want to take on additional debt. Those that are ready to buy are looking for new construction so they can get exactly what they want without compromise. Millennials also prefer easy access to town centers and public transportation.
While incredibly low inventory has been the norm in the MetroWest area for the past year-and-a-half or so, experts predict that this will be the last year that low inventory will help bolster property prices. That said, that distressed inventory is quickly drying up and sellers are looking at better profit margins than they have in years.
Homes right now are priced to please sellers, and they know they can zone in on buyers anxious to make a purchase before interest rates and home prices shoot up even further. Prospective house hunters, however, should not give up hope. Shopping for a new home now, while others wait for the spring and what they perceive will be an onslaught of new inventory, is actually advised. Serious sellers have active listings now, and there’s less competition for buyers wanting to scoop up what’s available.
Some experts think lending standards will loosen this year, but not all are in agreement. To fill the void, a new concept called “shadow banking’’ has started to emerge. Borrowers would pull mortgage funding from a hodge-podge of private funds, wealthy individuals, family offices and refugees from other lending markets. While it’s similar to traditional bank lending, it’s done outside of banks and can get around bank regulations. Whether or not this is advisable remains to be seen — buyers and sellers should consult a real estate professional with a proven track record to discuss whether non-traditional funding makes sense and is the safest route to follow.
While interest in developing suburban areas varies from neighborhood to neighborhood, there is a greater focus on more urban-minded projects located in spots where amenities and public transportation are easily accessible. Wellesley is one of those types of communities.
The pace of job growth as well as income and wage growth is still holding back the real estate recovery in some areas, and until those numbers jump up, the housing recovery won’t be complete.
Home sale predictions will continue to be made for years to come, and how accurate those predictions will be remains to be seen. One thing is sure — the market is clearly on an upswing and if the numbers we’re seeing in our local cities and towns is any indication – will continue to recover at a quick pace. Whenever you’re making a big decision about one of your biggest lifetime investments – your house – consult a veteran real estate professional to help you navigate a purchase or sale. You’ll be glad you did.