2013 was a year of change. Interest rates dipped to nearly their lowest ever, and then rose as the Fed announced a gradual reduction in its mortgage bond purchases. Prices advanced by 15+ percent. Lack of inventory became a bigger problem than a glut of foreclosures. Foreclosure levels declined dramatically. Builders once again began to build. Land is selling again. Real estate once again is in the “driver’s seat,” with a great deal of stimulus being applied to get the real estate and job markets moving again.
The changes coming in 2014 will provide you with some real opportunity--if you pay attention!
We are in an era of “price adjustment,” which means that prices will fluctuate throughout the year. We are also at the end of a twice-in a-century recession and real estate meltdown. Even though there will be some volatility, we anticipate that real estate will move higher this year, but at a slower rate. You can make this work for you by paying close attention to the current pricing in the marketplace (Let your agent help you with this, and check on your own). Here’s how to empower yourself for success in the market in 2014:
If you are a seller, knowing and using pricing information gives you a real advantage over most sellers. You can adjust your price to the current market levels as the changes occur, and potentially even see a bidding war on your property. A proactive seller always does better in times such as these.
If you are a buyer, you can know when to negotiate price, and when to expect to pay more than list. You will also know whether or not to enter a bidding war like the one mentioned above, and how far to go in your bids for property. You should always estimate the amount needed to make any additional payments required, and estimate your costs accordingly. (for each addiitional $1,000, about $5.50 per month interest and principal.)
The market is the market. Whoever fights it loses. Whoever learns it and works with it wins!
2014 also promises to be a year of change for the mortgage markets. The CFPB (Consumer Finance Protection Bureau) just released guidelines for QM Mortgages (Qualified Mortgages). These rules are complex, and still being analyzed by mortgage professionals and the companies they work for.
We don't yet know how these new rules will work, but ultimately they promise some consumer protections. For now, though, many mortgage lenders are working hard to make certain their loans comply with the new regulations.
In light of changes in the mortgage markets, you may wish to consider either a VA or Conventional loan first. FHA loans have a larger monthly premium for their mortgage insurance. You cannot eliminate this premium without refinancing into a non-FHA loan--it lasts for the life of the loan. Conventional mortgages, on the other hand, have mortgage insurance (insures your lender against loss) that typically disappears once there is sufficient equity.