It doesn’t seem that long ago that everyone was writing about the supposed death of the real estate market. The housing market appeared to have experienced a complete collapse; the mortgage industry attempted to stop the hemorrhaging of funds through toxic mortgage practices that produced an unprecedented number of defaulted loans.
Despite the common prediction that the industry had gone too far off of the edge for salvage, the market is currently making a powerful comeback and is approaching a stabilizing phase.
An improved scorecard
According to a scorecard produced every month by the U.S. Department of Housing and Urban Development, home sales are on a steady rise while the increase in prices has begun to slow. This creates the perfect conditions for an even better year in 2014.
According to the scorecard, foreclosures are down. In January, a total of 30,226 homes underwent foreclosure, which was down more than 40 percent from the same month in 2013. New home purchases increased in the month of January as well. Purchases of new homes rose a total of 9.6 percent.
Rise in positive equity
The scorecard also revealed that homeowners’ equity continues to grow, which confirms the predictions of Erin Carlyle of Forbes. Carlyle predicted that not only would positive equity continue to grow, but the ability of potential homeowners to obtain loans would also increase.
She asserted that the projected rate increases will cause the refinance business that many lenders are relying so heavily on right now to recede; which will force lenders to loosen restrictions for new home loans.
A rise in inventory
One of the primary indicators of a stable housing and real estate market is available inventory. When demand is up but inventory is down, the prices tend to soar. This is simply an expression of supply and demand economics.
An article in the Huffington Post suggests that the inventory will reach traditional seasonal levels. This coincides with the data released by HUD. As the inventory continues to increase and potentially reach normal seasonal levels, the rise in prices will gradually slow, which will stabilize the market and encourage more purchase activity.
If and when the increase in home values levels off, the nation is likely to experience a slight decrease in home affordability. The rate of increase should slow dramatically when the rate at which the values are rising begins to slow.
If the market continues to grow, everyone should benefit. Homeowners will certainly experience benefits as they return from beneath the water and achieve positive equity in their homes.
Home sellers should receive significantly more for their properties than they could have anticipated only a couple of years ago. Buyers will be able to find properties that increase in value, and also have a much easier time securing the necessary financing.
For major real estate brokers that handle massive volumes of transactions, such as Keller Williams, this is great news. The market is primed for some rich activity in 2014.