Things started to look up for the housing market back in 2012. An increase in home prices led many to anticipate a full housing market recovery, according to CNNMoney. Flash forward 2 years to 2014, and things aren’t looking so rosy, at least to some people. Despite predictions for growth and recovery, the housing market hasn’t quite performed as people expected. That doesn’t mean that you should avoid buying a new house or refinancing your current mortgage, though.
New construction concerns
One of the biggest areas of concern when it comes to the housing market recovery is the unimpressive growth of new construction. Fortune reported that estimates for new construction were positive back in November 2013. While the estimate for new construction in January was once over 1 million new homes, the actual, seasonally adjusted figure was just 880,000 new homes.
The lack of new homes being built can potentially throw a wrench in the housing market recovery this year. New construction is needed to meet demand for housing. Without more new homes, prices can climb, and demand can become too great.
Foreclosure rates seem better
Things are looking up for the housing market in some aspects. For example, the number of foreclosures in some areas fell considerably from 2013 to 2014. In Cobb County, Georgia, there were 290 properties put up for foreclosure auction in February 2014. This is far lower than the 760 homes put up for auction in February 2013, according to the Marietta Daily Journal. Falling foreclosures mean that people aren’t struggling as much to be able to pay for their homes.
Prices creeping up
Fewer foreclosures means fewer homes on the market, which means housing prices are expected to rise. While you might think an increase in home prices is a good thing, especially for sellers, that’s not necessarily so, according to Bloomberg. In some cases, the cost of homes is increasing too much, and it’s outpacing homebuyer’s income.
Drop in first time homebuyers
While programs exist to help first time homebuyers, Bloomberg notes that there has been a sufficient drop in the number of new buyers between January 2013 and 2014. In 2013, first time buyers were involved in 30 percent of all purchases in January. In 2014, first timers made up just 26 percent of all purchases, the lowest since 2008. According to Bloomberg, the lack of first time buyers will have a negative impact on the recovery. If you can’t get your foot in the door of home ownership, you won’t be able to trade up to a bigger and more expensive home as your income grows.
While the decline in the housing market might be alarming, people shouldn’t panic. Inventory is still available, and home prices haven’t skyrocketed yet. It’s still possible to purchase your first home with a low down payment, too. Mortgage rates are also still low, making 2014 an ideal time to either refinance or apply for your first mortgage.
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