After several years of slow recovery, the housing market began to show signs of improvement in 2013. Some homeowners saw their equity grow as home prices rose and sales of single-family homes increased. However, the market still has its challenges.
According to Lawrence Yun, chief economist for the National Association of Realtors, 2013 was a recovery year, with existing-home sales expected to increase 10 percent from the year before and existing-home prices projected to climb 11 percent.
The 2013 market experienced a shortage of housing inventory. Data showed inventory levels swung from a record high of 11.9 months in July 2010 to a recent low of 4.3 months in January 2013. Recently however, inventories have started to increase – current unsold inventory shows a 5.1-month supply of homes.
“Tight inventory typically means rising home prices,” said Donald Byrd, president of the Johnston County Association of Realtors. “This is what we’re experiencing now. Prices have gained 18 percent over the past two years. An increase in prices has helped lift many homeowners into positive equity again, and foreclosures and short sales have declined.
“When homeowners benefit from price appreciation and housing equity increases, this helps the economy through greater consumer confidence and spending.”
Despite these positives, housing affordability for some buyers declined in 2013. Yun predicts affordability will continue to decline in 2014 if mortgage rates continue to rise and if qualifying for a mortgage remains difficult.
Johnson County real-estate agents have reported that tight credit restrictions are preventing qualified buyers from becoming homeowners, and that is making it harder for some homeowners to sell their homes. The Johnston County Association of Realtors thinks regulatory reform the federal Consumer Protection Action will worsen mortgage availability in 2014.
“While these new rules reduce risky loan products and establish critical lending protections for consumers, they could also preclude many potential home buyers from entering the housing market,” Byrd said. “Qualified buyers with good jobs and strong credit histories cannot continue to be turned down for loans. Lenders need to return to sensible lending standards this year.”
Yun predicts the United States will continue to see healthy gains in existing-home sales this year, and prices will continue to rise. However, he also projects mortgage rates to rise and inventory shortages to continue.
“Despite the challenges we face in the coming year, I believe Realtors are feeling confident and optimistic about the future of our nation’s housing market,” Byrd said. “Homeownership is an investment in our future, and I believe 2014 will present tremendous opportunities for buyers, sellers and investors.”