Real Estate Forecast for 2014
Predictions are always tough but here is what we think is going to happen this year in the greater Lansing real estate market.
Unit sales will increase at a more historical norm of about 3.8%. The inventory of saleable property is constrained and new home builders are struggling to meet demand. Fewer foreclosures and distressed properties are coming to market and investor activity has declined. The fundamentals of new household formations and a relatively strong local economy will contribute to growth, however.
Average selling prices will increase, but not at the 11.9% pace of 2013. A rapid recovery of prices at the lower end of the Lansing market drove the average up last year. Some areas of greater Lansing actually declined modestly last year. Overall we expect prices to increase approximately 5% in 2014.
Mortgage interest rates will drift upward finishing close to 5% as the Federal Reserve begins curtailing its bond buying program. Even with continuing conservative lending standards and higher interest rates, credit worthy buyers should not be dissuaded from purchasing. Rates still remain at historical lows. Finding homes to purchase will be more of a damper.
Rents will continue to rise. Some younger Americans and first time home buyers have been left out of the housing recovery due to student loan debt and larger down payment requirements of lenders, Former homeowners who lost homes to foreclosure also put pressure on rental stock. Despite the continuing strength in the dream of home ownership the demand for multifamily apartments and single-family rentals will remain strong and will fuel increases in rents.
Foreclosures and distressed sales will continue to slow as they did in 2013. Rising home prices are keeping the ranks of newly delinquent low and banks have been doing a better job of modifying loans.
Overall the real estate market in greater Lansing will remain healthy. Buyers still have an opportunity to enjoy price appreciation and sellers will be able to move on with their lives after being stuck during the economic downturn.