Photo credit: Cyndie
Lawrence Yun, NAR chief economist, said that 2013 was the completion of two year’s sustained recovery: “Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market. We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”
Prices also jumped up by record amounts, with the national median existing home price for 2013 hitting $197,100, 11.5 per cent higher than 2012 and the strongest annual rise since 2005.
But rising values and climbing mortgage rates have slowed down the market’s rate of recovery, as buyers are either less able to afford to purchase a property, or more cautious to do so.
“With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home,” commented NAR President Steve Brown, co-owner of Irongate, Inc., Realtors in Ohio.
Investors are still on the lookout for a potential bargain, though, suggests new data from RealtyTrac, whose report shows that short sales and foreclosure-related deals made up 16.2 per cent of residential transactions in 2013, up from 14.5 per cent in 2012.
“It may surprise some to see distressed sales rising in 2013 given that foreclosure starts dropped to a seven-year low for the year,” comments Daren Blomquist, vice president at RealtyTrac.
“While short sales did trend lower in the second half of the year, there are still more than 1.2 million properties in the foreclosure process or bank owned, providing a sizable pool of inventory that the housing market is in the process of absorbing.”
All cash purchases also increased in key states such as Florida, which is popular with foreign buyers. Cash deals accounted for 42.1 per cent of sales overall in December 2013, up from 18 per cent in December 2012. In the Sunshine State, the figure was higher at 62.5 per cent, according to RealtyTrac.
Figures from the Florida Association of Realtors, though, paint a different picture, with cash-only sales dipping in December, which Florida Realtors Chief Economist Dr. John Tuccillo attributes to “reduced investor activity and thus a return to a more normal market”.
Whether driven by investors or not, the statistics certainly agree on one thing: 2013 was a good year for American real estate. In Florida, December marked 25 months of consecutive annual gains in statewide median sales prices, which is encouraging more homeowners to list their properties for sale.
With different markets accelerating or decelerating across the country, the forecast for 2014 is mixed, as normality arrives at varying speeds. Nationwide, house prices are expected to climb 4.8 per cent through the year, according to Zillow, more in keeping with the traditional growth seen outside of rapid recovery periods.
Zillow expects all but one of the 35 largest metro areas in the US to show appreciation in 2014, although the annual rates range from 16.1 per cnet (Riverside, California) to 0.4 per cent (Kansas City).
“The housing recovery is entering the middle innings after an incredible run in 2013. Below the surface of last year’s market, a number of unsettling trends started to emerge as a result of rapid and ultimately unsustainable appreciation, setting up a bit of a mixed bag for 2014,” explains Zillow Chief Economist Dr. Stan Humphries.
“Affordability issues will help put the brakes on many markets that saw huge appreciation rates, like California and the Southwest, creating volatility that could potentially cause whiplash for home buyers and sellers. At the same time, we expect more homes to be available this year as more sellers enter the market and more homes get built, and a decline in investor competition should make for a more hospitable market for many buyers.”
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