After several years of slow recovery, the housing market began to show signs of improvement in 2013. Some homeowners saw their home equity grow as home prices rose and single-family home sales increased. However, the market still has its challenges and Realtors® remain committed to helping build a responsible, sustainable housing market in 2014.
On the National level, 2013 was a recovery year, as annual existing-home sales are expected to increase 10 percent over a year ago, totaling just above 5.1 million, and national median existing-home prices are projected to be 11 percent above last year. The 2013 market also experienced a shortage of housing inventory. NAR data showed inventory levels swung from a record high of 11.9 months in July 2010 to a recent low of 4.3 months in January 2013. Recently however, inventories have started to increase – current unsold inventory shows a 5.1-month supply of homes, according to the National Association of Realtors®’ Chief Economist Lawrence Yun.
Housing affordability for some buyers declined in 2013. Yun predicts affordability will continue to decline in 2014 if mortgage rates continue to rise and particularly if qualifying for a mortgage remains difficult. Silver City Regional Association of REALTORS says Realtors® have reported that tight credit restrictions are preventing qualified buyers from becoming homeowners, and that is also making it more difficult for some homeowners to sell their homes. SCAR thinks mortgage availability will only be worsened by regulatory reforms stemming from the Dodd-Frank Act Wall Street Reform and Consumer Protection Act that go into effect in January 2014.
“While these new rules reduce risky loan products and establish critical lending protections for consumers, they could also preclude many potential home buyers from entering the housing market,” said Sylvia Mikes, Association President. “Qualified buyers with good jobs and strong credit histories cannot continue to be turned down for loans. Lenders need to return to sensible lending standards this year.”
Yun predicts we’ll continue to see healthy gains in existing-home sales this year, and prices will continue to rise. However, he also projects mortgage rates to rise and inventory shortages to continue.
On the local level 2013 was not a good year. The volume of sold residential properties was down slightly over 11%, but the median prices rose from $120,000 in 2012 to $135,000 in 2013. Also, the days on the market have dropped from 190 to 184. Land sales really have taken a hit – Volume sold was down 40% - it was the second worst year since 1998. “This year activity seems to be looking up. Personally, I have seen an increase in inquiries for rural areas and vacant land so far this year”, said Sylvia Mikes. “New construction was also down. Even though parts of New Mexico have reported increases, the Southwest is still struggling.”
SCAR says Realtors® remain actively involved with lawmakers to ensure housing and homeownership issues are first on the nation’s public policy agenda this year. Several critical issues affecting housing will continue to take precedence this year. SCRAR President, Sylvia Mikes says delaying further flood insurance rate increases is one of them. Also, as debates surrounding federal tax reform likely heat up again this year, Realtors® will continue to urge the preservation of property and homeownership tax policies. Realtors® also support legislation and regulations to create healthier housing and mortgage markets, something Mikes says is vital to the recovery.
“Despite the challenges we face in the coming year, I believe Realtors® are feeling confident and optimistic about the future of our nation’s housing market,” said Mikes. “Homeownership is an investment in our future, and I believe 2014 will present tremendous opportunities for buyers, sellers and investors.”