Real Estate Market Outlook for 2013-2014

Posted by RealEstate_Guru

It’s never too early to start paying attention to trends, especially if you’re planning to buy or build a home. Since this is likely the most money you’ll ever invest, doesn’t it make sense to do so as wisely as possible? Here’s a brief run-down on what to expect in the overall real estate market for the next couple of years, specifically 2013 and 2014.

Seeing the Big Picture

Analysts report that housing starts are expected to increase, along with a rise in home prices in 2013 that’s likely to peak in 2014. According to a survey of nearly 40 of the country’s leading real estate economists and analysts, the nation’s economy is likely to improve, taking with it the housing industry, including real estate and capital markets. Over all, home prices are expected to stop declining in 2012, and begin to realize modest gains in 2013 and 2014 of about 2% and 3.5%, respectively. Vacancy rates for industrial and commercial property are projected to drop to between about 1% and 4%. Vacancy rates for apartments should remain stable, and hotel occupancy will increase. For all types of rental property, rents are expected to increase from about 1% to as much as 5%, depending on the type of property.

More Important Projections

The economy shows potential for a strong upturn beginning in 2013, with GDP (gross domestic product) increasing from 2.5% in 2012 to 3% in 2013. In 2014, the rise if projected at 3.2%. Along with this increase, it’s expected that the national unemployment rate is likely to decrease from about 8% in 2012 to about 7% in 2014. Also in the forecast is a projected rise in the number of jobs from about 2 million in 2012 to approximately 2.5 million in 2013, topping out at 2.75 million in 2014. While this gives plenty of reasons to be hopeful, analysts are mindful of negative trends, such as higher inflation and rising interest rates, which may directly impact the real estate market’s home prices, as well as the cost of mortgage money incurred by home buyers. By 2014, inflation may be as high as 3%, and the cost of borrowing is likely to be in the range of 4%.

Other Key Factors

The survey asked respondents for a consensus view that includes the influence of 26 important economic factors, including property transaction volumes, property investment returns, issuance of commercial mortgage-backed securities, housing starts and home prices. Although the forecast suggests that economic growth will be steady rather than sporadic, there’s always the chance of negative influences based on factors like the 2012 US presidential election, the European debt crisis, major elections in foreign countries, and tightening financial regulations in both the US and abroad.

Taken as a whole, the survey expresses the respondents’ confidence that the economy with improve, resulting in a buoyed real estate market.

 

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