Luxury Insider: The Bets Are Open on 2014 By Alain Pinel | JANUARY 15TH, 2014 What’s yours? Too early to know? Too risky to tell?…. I know it’s hazardous to formulate year-long prognostics while hardly recovering from the holidays and buried under snow in much of the country. Sure, we’ll know more about the 2014 real estate vintage when we are something like 11 months deep into the year… Well, I am going to put my neck out: 2014 will be a heck of a year. There you have it. If you believe me, get ready for a move! Yes, I am resolutely upbeat about the real estate market this year. And you should be too. Now. Don’t miss the opportunities this year will offer, whether you are looking to buy, or sell, or both. The famous recovery we have been talking about for three years now, is now just about as real as it will ever be. Those who are waiting for more obvious and permanent signs of an economic rebound may find themselves on the bench until the next downturn. After more than 7 years of beatings, punctuated by the housing debacle, the financial crisis, the agonizing recession and the budget mess, we are now at a point where we can actually relax and dare to do what we would like. Unemployment is shrinking steadily. Business and consumer spending is going strong. US economic growth is accelerating and is expected to reach 2.7% this year, according to a Wall Street Journal panel of economists. The stock market has been on fire, making it very hard for investors of all sizes not to win high rewards since most of the cases were winning numbers. Confidence is building. More importantly for the purpose of this blog, the housing picture is looking very good. It has been a while since we were able to say that much. Sales are up and prices even more so. Nationally, home values have risen roughly 14% year-over-year, the biggest gain since 2006. Markets which suffered the most from the recession are among those which benefited the most from the recovery. Prices in Las Vegas, as an example, are up 27% from a year ago. The rebound is bolstering household wealth across the US. Looking at the months ahead, we have to be optimistic. Underwater homeowners are progressively recovering equity. The number of short sales and foreclosures are dwindling, further reducing the housing supply and pushing prices even higher in the process. The fact that mid-term elections are on the calendar this year, is another good omen: nobody in Washington wants to play too tough or look silly at this juncture. Peace on earth. Perhaps we will wake up, the day after, with headaches and a hangover, but hopes transcend the pains… The only grey clouds out-there are the cost and the availability of mortgage financing. We all know that rates are moving up, slowly but surely, reducing affordability. The Fed will be using much TLC to not disrupt but rather accompany the recovery, but this, together with tighter credit, will be in the minds of buyers. All I can say to them is “you’ve been waiting long enough.” Time will eventually start working against you. The horizon is clear of any major hurdle for all of 2014. This year is the year. With all the facts and omens outlined above, I have a hard time thinking that real estate prices, overall, will rise any less than 10% this year. I realize that it is prudent to suggest that they will rise at all and, if they do, that they may go up more than a few notches, up to 5%… But, from where I stand, it is only “logical” to believe that another double-digit jump is a safe and realistic prediction. Generally speaking, I would bet my Cartier watch that, on average, the low-end will jump 15%, the median range 10% and the high-end (where the inventory is now growing fast) about 5%. The bets are open. What’s yours?
Posted on: Thu, 16 Jan 2014 01:15:41 +0000