Do you know what to expect in this year’s housing market? No matter what you think you know, listen up! Veteran housing economist David Berson, who previously served as the chief economist at The PMI and Fannie Mae, gives us his professional housing forecast for 2014.
Berson’s first prediction is that 2014 will be the strongest year for housing since before the Great Recession. With employment growth accelerating and unemployment declining, most economists expect an improved job market in 2014. In turn, this will improve housing demand this year, even if mortgage rates rise and affordability declines.
Secondly, demographics will begin to favor housing activity. Housing is most affected by the demographic factor: household formations. In the years following the Great Recession, people who normally would have lived on their own decided to move in together if they were worried about their job or economic standing. Now, there is a pent-up demand for household formations. Berson explains, “Beginning in 2014, the pace of household formations should accelerate to an above-trend pace for several years, pushing up housing demand.”
Lastly, mortgage availability shouldn’t worse and will potentially improve. Compared with recent years, mortgage availability has slightly increased. According to Berson, “the increase in new households expected to be created this year, spurred by a stronger job market, should find that qualifying for a mortgage loan will be somewhat easier in 2014 than in prior years.”
Source: “Economist: What 2014 Holds for Real Estate,” REALTOR® Mag, Daily Real Estate News, March 20, 2014