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market forecast
The National Association of Realtors just wrapped up their 2013 Conference & Expo. Chief economist for the organization, Lawrence Yun offered his insight on what to expect for the 2014 housing market: steadiness in existing-home sales over the next year as prices continue to ascend.
Based on what has happened in 2013, Yun says he expects existing-home sales to be up about 10 percent in 2013 to 5.13 million and that 2014 will hold fairly even at about 5.12 million.
We in the Denver housing market, predict continued growth in the number of homes sold, with the accelerated appreciation of 2013 to level out in ’14 to around 4 percent.
National median existing-home prices should end this year about 11% higher than 2012, while next year’s growth is expected to nearly half of that. Those who’ve been following the return of the housing market know that the past two years have shown a 20% cumulative increase in existing-home sales with prices rising an average of 18%. Incomes have not kept pace, rising between 2-4% in the same period.

“We’ve come off of record high housing affordability conditions in the past year, and are now at a five-year low, but conditions are still the fifth best in the past 40 years,” Yun said, noting that the median-income family should still be “well-positioned” to buy a home in 2014 in many areas.

Affordability, limited inventory (especially in metro Denver), stringent mortgage standards and rising interest rates will all factor into the expected gains over the coming year. Housing starts are predicted to fall short of the underlying demand, while sales of new homes are expected to total 429,000 in 2013 and 508,000 next year.
Based on Lawrence Yun’s forecasts,the top 10 markets to watch for a housing turn around in 2014 are Salt Lake City, Utah; Naples and Tampa, Florida; Atlanta, Georgia; Boise, Idaho; Houston, Texas; Charlotte, North Carolina; Denver, Colorado; Seattle, Washington; and Tucson, Arizona.

As a follow-up to my previous article about the housing market and the mainstream media, I thought I’d post this. Just in from
The Wall Street Journal it seems they’re finally confident to announce what we’ve been watching here in Denver for the past six months.

From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.

Though one thing in the article is not likely to affect the Denver market.

The biggest threat is a large shadow inventory of unsold homes, homes which owners won’t put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices.

In Denver, the ‘Shadow’ is but a phantom. We currently have such low inventory, especially in homes priced under $250k, and our pre-foreclosure stats are well below the national average. Combine this with the Colorado’s swift foreclosure process and the fact that we hit the slump ahead of the curve, allowing us to recover sooner, we are not counting on a glut of “Shadow Inventory”.

I tend toward optimism. The New Year is always quite appealing. It’s not that I believe there will be a sudden, magical turn in the way life works, ushered in by a herd of unicorns; I like the New Year in the same way I like clean, white sheets.
January is filled with energy, coming off of the seasonal rest we call the holidays. Things are wrapped up with shiny bows; gifts and year-end spread sheets. There is an ending, the ball drops, you rest, wake up and begin all over again. I love it. For many 2011 was a rough year; a devastating tsunami, a lingering doubt over the debt ceiling and our jobs. For others it was glorious; oppressive regimes were overthrown and the taste of freedom filled the air. The global economic uncertainty of the day can stop you in your tracks if you let it, but even Chicken Little eventually realized it was not the sky that was falling, but the rain.
Here in Denver, 2011 was not the worst year in the housing market. Though families still struggle to keep their homes, those numbers are receding and we are well beyond the “crisis”. Investors have stepped up (or rushed in) to purchase distressed homes, gentrifying neighborhoods and flipping them for first time buyers or building their portfolios with buy and hold strategies. Vacancy rates in Denver are under 2%, making landlords very happy. This is all good news as the housing market recovers from the ground up.
We begin 2012 with the standard economic indicators up; consumer confidence, GDP, retail sales, housing starts and existing home sales, while the unemployment is slightly down. The good news kibble:
• Pending Home Sales index from the National Association of Realtors (NAR) went UP 7.3% in November, hitting its highest level since April 2010!
• NAR’s chief economist commented, “Housing affordability conditions are at a record high and there is pent-up demand from buyers who’ve been on the sidelines. The sustained rise in contract activity suggests that closed existing-home sales should continue to improve in the months ahead.”
• The S&P Case-Shiller index for October showed minor price drops in 19 of the 20 surveyed metro areas, but the index was UP 1.9% from its post-crisis low in March 2011.
I am a news junkie, constantly scanning cable news shows and internet sources to see what the ‘experts’ have to say and to learn both sides of the issue. Lately, where real estate is concerned, everything I watch says yes. Even the “con” side says “yes with caution”, which makes perfect sense to me.
As we head full gallop into an election cycle, we can expect to be pummeled for the next ten months with tales of silver linings, predictions of doom. That’s their job. Mine is to help people buy, sell and invest in real estate, creating wealth in the process. Cue the Unicorns.