- Posted February 2, 2014 by
An Industry That Has No Sense of Guilt: U.S. Real Estate Predictions for 2014
In a series of predictions for 2014, the reader shall be the final arbitrator for what stands as a reasonable expectation of the coming hits and misses for the year long 2014 ‘real estate’ season. Denoted below, is a small pot pourri of real estate predictions.
Without further delay, the following will make headlines in 2014: Higher Interest Rates, People Migration, Institutional Buyers Go On Selling Spree, Consumers and Technology, and the long awaited Return of the Vampire/Brokers. All of the latter predictions and prophecy from those that have the ability to read the New York Times without moving their lips.
Higher Interest Rates
As a foregone conclusion, interest rates will be higher, but housing demand will be ferocious, which will consequently strangulate existing inventory and drive up home prices.
As a result of the higher interest rates --- so predictable, that even a 5th Grader can understand this basic algorithm economic relation, many real estate connoisseurs anticipate a rise in home sales; in part to growing consumer confidence, lower unemployment and rising property values.
If you’re reading this right now and want a solid number in connection with interest rates, most are predicting --- myself included, that interest rates will be about 5.50 to 5.75 percent by year’s end.
It’s hard to joke about interest rates. Anytime you start name dropping John Maynard Keynes, Adam Smith and Milton Friedman, it’s difficult to get cute about it. Notwithstanding the after mentioned, most real estate folks anticipate a gradual increase in inventory --- nationwide, and that the “old normal” will actual make more than just a cameo appearance in 2014. But as I like to point out, never think of real estate in absolute terms.
Think of real estate as a box of crayons. Lots of different variation, with only slight variations of gray. In another words, what happens in Vegas, doesn’t stay in Vegas (or something like that). More particularly, regulatory uncertainty will continue to impact the cost and availability of mortgage credit. So, just like the Sun rises in the East, lawmakers will continue discussions about federal tax and mortgage finance market reform. I know. It’s complicated.
Build it and they will come? Maybe so, maybe not. Expert insiders have postulated ---and from a micro economic (and populist) standpoint, it kinda makes sense, that present homeowners will move en mass to higher ground (metaphorically speaking), to take advantage of lower prices.
Explains Charlie Young, President and CEO, ERA Realty, “More people will make big moves. As home prices rise, many homeowners are coming into positive equity on their home and are finally in a position to move. We have found that 1 in 3 people would consider making an out-of-market move to take advantage of lower housing prices, lower cost of living, better job opportunities and better weather. And U.S. Census data indicates that “migration” is on the rise, particularly among people in their 30’s, as people ask themselves, “Where do I want to build equity?” ‘
Institutional Buyers Go On Selling Spree
As an absolute 2014 certainty, institutional investors will activate a military style surge in ridding themselves of foreclosed single family homes they’ve purchased over the past five years. Very likely they will begin unloading in late 2014, at least according to some real estate experts as prices rise. The upside of this tactic is that it’s a win-win. The market gets much needed inventory, and the hedge fund money triumphs again.
Consumers and Technology
Similar to the potential Google Glass niche revolution that may happen in 2014, whom I'm guessing will likely only occur for upwardly mobile people who drive Volvos, own Apple computers and have a strong sense of white guilt --- technology will still have an effect over the masses, nonetheless. Because when you think about, how expensive is an app, since most of them are free anyway? I digress. Here are what the experts say:
I believe that creating broker-to-consumer connections will be the backbone of emerging technology and services across a variety of MLS and vendor channels in 2014. James Harrison, President and CEO, MLSListings Inc
Further mobile enablement of the home buying and selling lifecycle for agent and consumer. Online transaction management, digital mortgages and digital recordings. Ben Graboske, SVP, CoreLogic
We want to see real estate companies continue to bring new types of data to homebuyers. We’re beyond the point where it’s enough to show homebuyers data about school districts and property lines; we want to see homeowners getting access to easy-to-understand weather scores and crime scores — data that is highly relevant but that wasn’t possible to deliver accurately until now. Information is really liberating homebuyers to make good decisions. Paul Gallagher, VP, Maponics
Return of the Vampire/Brokers
A constant variable in the brokerage industry, is the recycling of used and new agents. There’s good reason to have this concern.
“Sadly, a return of many agents from hibernation as the market improves, putting less competent agents into complex transactions as consumers who fail to properly vet their agent suffer. Gen Y consumers will be the first generation to place more weight on online reviews and other agent-vetting vehicles to ensure that they are not represented by a less competent agent”, says Phil Faranda, broker-owner, J. Philip Faranda Real Estate (Briarcliff Manor, N.Y.)