Market Update and Preview

I just received a great update from Tee Tillman of Colony Title  located in Columbia. To me it's an excellent summary of 2013 and a great peek at what to expect for 2014. 

From Tee, 

Welcome to 2014. With a new year comes renewed optimism on the real estate front, and 2014 is no different. But, this time there seems to be some reason for cautious optimism. During 2013 we saw the gradual stabilization of housing prices in most markets, which the experts predict will bring more sellers back into the marketplace. Sellers who previously withheld from putting their homes up for sale are now seeing that they may in fact be able to get their price. That’s good news as most realtors felt there were not enough homes on the market.

Rates will start to creep up as the Fed will gradually ease their purchase of bonds which has held the interest rates below what they should have been. But do not expect a wholesale retreat. The predictions are that the rates will fluctuate between 4.375% and 5.5% with an average just about the 5% mark. This is still well below what we had experienced just a few years ago. There will be a larger gap between the 30 year fixed and the 5/1 ARM so we may see more buyers going to the 5/1 ARM which is predicted to be in the 2.875% to 3.875% range. For first time home buyers who traditionally keep their first home less than five years, it’s a great scenario. By the time they are ready to purchase their first move up property, they will have had time to build equity in their existing home.

Congress has not as of yet acted on the extension of the tax break for those who have received the benefit of loan forgiveness on their principal residence, so look for that to be an action item on the agenda early this year. As of January 1, 2014 if you sold your home via a short sale after that date, you will have to pay taxes on the forgiven debt as “phantom income.” In an article in the Washington Post “according to the National Association of Attorneys General an estimated 7.1 million homes are still in a negative equity position.” To help the real estate recovery, it would seem reasonable for Congress to extend the tax forgiveness for another year.

No comments: