|After year of difficulties, the housing market continued its resurgence in 2013. The improvement is expected to continue over the next 12 months, but the pace will be sluggish.
Industry experts believe that 2014 should see continued stabilization and growth in the housing market, which will be defined by fewer foreclosures, rising home prices and increased overall activity among homeowners. Still, inventory is limited and both builders and homebuyers must work within a different set of lending standards.
To purchase a home in the current market, a prospective homeowner must have impeccable credit. The average credit score in November 2013 was 756, according to software company Ellie Mae. Denied applications were rated at an average score of 729.
Americans should not expect credit standards to lighten in the next year. In December 2012, new regulations instituted by Dodd-Frank have cracked down on risky mortgage products and risky borrowers. These changes require all lenders to evaluate factors such as income, employment status, credit history, assets and debt-to-income ratio.
The housing market’s ability to recover in 2014 relies heavily on construction activity. With builders facing an uncertain lending environment, Americans can expect a slight increase in the number of new homes available. As demand spikes, the pace of home construction will soon follow. Average 30-year mortgage rates jumped from 3.34 percent in January 2012 to the current rate of 4.48 percent. The S&P/Case-Shiller home price index shows that nationwide home prices have improved 11.2 percent in the last year.
While it continues to be a sellers’ market, buyers can also benefit from price gains. Although first-time homeowners may have reservations about making a purchase, current owners, are watching their homes gain value. In a CoreLogic study, researchers found that more than 85 percent of homeowners with a mortgage in 2012 have some equity in their home, up from 75 percent in 2011.
Overall, the housing market is showing signs of life that should be encouraging for property owners and investors alike.