2014 Housing Market Set for Steady Growth
Despite price increases, interest rate increases, and a decrease in available post-foreclosed homes, predictions for the 2014 housing industry are that new construction will increase, thus increase employment for the construction industry. The prices of homes have been increasing in record-breaking percentage jumps throughout the entire year of 2013 because let’s face it, they had nowhere to go but up. However, these increases are unsustainable, and the tapering of these increases will make for a “normal” real estate market in the Greater New Orleans area. Increases of 11% – 12% will decrease to more modest gains of 5%-6% until pricing levels off.
The housing market used to be a buyer’s market with “desperate” builders anxious to get out from under high interest loan payments and taxes on homes that were sitting there in the 14-month supply. Negotiations for standing inventory were practically non-existent because buyer’s simply dictated their own price instead. With the increase of home prices, sellers have been on the receiving end of higher prices.
That is expected to change in 2014 as builder confidence has been on the rise. With the decrease of standing home inventory to approximately a 2 – 3 month inventory in the Greater New Orleans area, builders have been seeing the demand for a supply of new homes. As builders start to construct new homes to meet this demand, especially in St. Tammany Parish, the inventory will increase, and negotiations between new home buyers and builders, as well as existing home buyers and sellers, should return to the balance that they were before the Recession even started.
Another reason economists are anticipating a solid housing market for 2014 is because the year of 2014 will probably see another rise in interest rates. Refinance clients and home buyers should be applying for mortgages and loans while the interest rates remain low. The Fed has begun to taper the bond buying program, which will start interest rates to eventually rise. Right now, interest rates are hovering around 4.5%, only 1 percentage point higher than interest rates last year. They are only predicting around another 1% point in 2014 for 30-year mortgages, which is still a historically low interest rate for a home purchase. Even though interest rates will be rising, it will be a moderate rise, and the rate is still low.
Overall, 2014 should see a solid increase in new home inventory built by builders meeting the demand for buyers trying to cash in on the historically low interest rates for 15-year, 30-year, and ARM mortgages. In the Greater New Orleans area, this need is highlighted by the increase in demand for new lots for sale at Bedico Creek Preserve in St. Tammany Parish. In addition to many new home buyers purchasing our lots, we have added 5 new builders to our 6 different Neighborhoods over the past year. These builders are excited to own our lots and build new homes for interested new home and custom home buyers in St. Tammany Parish. If you are in the market for a new home, Contact Bedico Creek today at 985-845-4200 or E-mail [email protected].
