Each year, Zillow.com makes predictions about the year ahead, and I had to nod in agreement when I read their predictions for 2014:
1) Home prices will increase in 2014, but at a much slower rate than in 2013, which showed a 5% national increase and over 20% in some markets. (Our market rose about 7%.) The slower rate of price increases will be due to higher mortgage rates, already increased prices, and more supply as more homeowners find themselves able to sell without bringing money to the closing table due to rising valuations.
2) Mortgage rates will reach 5% by year’s end, for the first time since 2010, causing some markets to become unaffordable.
3) Lenders will make it easier to get a purchase money mortgage, as refinances start to dry up due to rising mortgage rates.
4) Homeownership rates will fall to their lowest point in 20 years, according to Zillow, as foreclosure and other factors increase the number of renters. (About two-thirds of us own our homes.)