By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
I was at the National Association of Realtors conference in San Francisco last week and the group’s Chief Economist Lawrence Yun dropped some numbers to paint a picture of what he expects going into next year.
So far, Yun is expecting a flat pace of sales – not a huge jump or a decline – and a 6% increase in prices. He’s also expecting interest rates to climb from their current average of 4.16% to 5.4% by the end of 2014.
Yun said he’s expecting “opposing forces” to keep sales volumes at their 2013 levels. While demand will continue to be strong, propped up by a strengthening job market, an increase in rates and prices will keep it at a steady level.
The market for new homes, on the other hand, is expected to jump quite a bit. Yun predicts sales of newly built homes will climb 18.5% to 510,000 next year. Overall, he’s expecting the market for new homes to improve as more financing for development comes into the market. Along with an increase in sales, Yun expects a 25% increase in new-home construction starts, which will boost this market.
What’s our take on this?
Any forecast that comes from NAR is worth highlighting. They have access to a lot of data that helps them make educated predictions. But it’s always good to remember that these forecasts are at the national level and used only to gauge a general direction of the national market.
And as we all know, housing is local. What this means to you and me is that things may look differently at our state, city and neighborhood level. For instance, in the Bay Area, we expect the pace of sales to increase next year, along with prices. There’s just too much momentum going right now for a significant stalling or flat-lining to occur.
We can’t speak for every local market in the country, of course. Just remember that forecasts are a generality used for talking about housing as part of the overall economy. Even as things are looking good (but maybe not fantastic) on that national level for 2014, some of the local markets could be looking at a serious boom year.
It’s all relative. And either way, we have a strong year to look forward to.