After my 2013 predictions, I’ve set the bar high for myself on my 2014 Predictions for the Arlington Real Estate Market. What better way to start the new year with some optimism for the real estate market. Here goes:
1. Interest Rates Will Increase, Affordability Will Fall. Rates were down to 3%, then 4%, now we hover around 4.5%. I suspect we’ll end the year around 5%. Each increase in the interest rate means more out of pocket each month for a home buyer, making things less affordable.
2. Inventory Will Increase. Prices have increased enough since our dip in 2009, that most people who bought in 2005-2006 can afford to sell (which will lead to #3), and that should help increase our inventory levels.
3. Foreclosures/Short Sales Will Be A Tiny Part of Our Market. We ended up 2013 with about 3.2% of our annual sales resulting from short sales or foreclosures. I think that will be even less in 2014, maybe around 1-2%.
4. New Construction, Mostly Single Family Homes, Will Continue to be Prevalent and Grow. There are builders snatching up land at every opportunity in Arlington, you will see that trend continue and more McMansions being built.
5. More Conventional Loans Will Be Used, Fewer Government Issued Loans. With the recent FHA mortgage premium hike and the fact that PMI never goes away, I suspect anyone who CAN afford to go with a conventional mortgage will as FHA as made themselves financially undesirable.
6. Multiple Offers Will Continue, Especially In the Market Under $900k. With affordability on the verge of decreasing and our inventory just starting to increase, the “affordable” market in Arlington is really anything about $900k and under. I would expect multiple offers to continue into 2014 in that market, especially for single family homes. There are pockets that will also experience craziness like Clarendon Condos and Townhomes, where availability is always slim, that will so be hit with multiple offers. In the lower prices ranges, expect to battle with builders for buildable land.
*7. Prices Will Increase. I almost forgot to add the obvious – Prices will increase!
Good luck to all of the buyers and sellers in 2014. May you find the right home!