Housing affordability will continue to drop next year but home loans will be easier to secure, according to year-ahead predictions from Trulia Chief Economist Jed Kolko.
Kolko believes repeat buyers will be the dominant player in residential real estate as investors and first-time buyers increasingly find themselves priced out of the market by rising home prices in 2014.
The process of obtaining a mortgage will also be smoother because, as mortgage rates creep up with the improving economy, banks will shift more resources from doing refinancings to originating purchase loans, Kolko said.
“Homebuyers in 2014 might kick themselves for not buying in 2013 or 2012, when mortgage rates and prices were lower, but they’ll take some comfort in the fact that the process won’t be as frenzied,” he wrote.
Home price appreciation will slow, too, in 2014, and urban centers will be hot for renters as multifamily construction underway comes online, Kolko said.
Based on the health of housing market fundamentals like job growth and construction activity — and ignoring markets Trulia determined to be overvalued or where RealtyTrac data showed a large foreclosure inventory — Kolko selected the following 10 markets as ones to watch in 2014: Bethesda-Rockville-Frederick, Md.; Charlotte, N.C.; Denver; Fort Worth, Texas; Nashville; Oklahoma City; Raleigh, N.C.; Salt Lake City; Seattle; and Tulsa, Okla.
Zillow, likewise, predicted that home values would rise, buyers would have easier access to a mortgage and mortgage rates would increase in 2014. Zillow Chief Economist Stan Humphries also predicted that the homeownership rate would fall below 65 percent to the lowest level in 20 years.