What will happen to the housing market in 2014?

January 22, 2014 2
What will happen to the housing market in 2014?

If certain forecasters are right, U.S. homeownership rates this year will tumble to their lowest level in nearly two decades. Therefore, 2014 could be the Year of the Renter.

Jason Cohen, a real estate investor in Pittsburgh, said many Americans are hesitant to buy homes because job growth remains “unsteady” and job stability is shaky.

“Too many people feel that they 
cannot be tied down to a permanent residence because they still may have to 
move for employment. Nor can they be tied to a mortgage because they may 
not see their employment as stable or long-term,” Cohen said. “Renting will continue to
 be a preferred option for many Americans in 2014.”

Another deterrent to homeownership: Stan Humphries, chief economist at online real estate marketplace Zillow, predicts mortgage interest rates will rise throughout 2014, likely hitting 5 percent for the first time since early 2010.

Since the recession, people have been living more frugal lifestyles, and they will continue to do so, which will be reflected 
in more condo sales in 2014.
— Bill Plattos, executive vice president, First Team Real Estate

Financial commentator Scott Shellady, senior vice president of Trean Group, issued a warning about the buying and selling of homes in 2014, in light of the 7.3 percent nationwide unemployment rate and a record number of Americans receiving food stamps.

“I think that the excitement about the housing market is overdone. The economy is still in the doldrums—getting better, but still in the doldrums,” Shellady said.

Self-Storage Effect
So, what does all this mean for self-storage professionals? If apartment rentals spike, self-storage facilities could see a slight decline in rental duration, said John Manes, chief operating officer of The Jenkins Organization, a Houston-based storage operator. That’s because homeowners typically store their belongings longer than apartment dwellers do.

“Self-storage is not as volatile in the ebbs and flows that other types of business generally see when it comes to these types of trends. So although one sector of our business may be in a downturn (homeownership),” Manes said, “the other will be in an upturn (apartment rentals).”

No matter whether they’re relocating to homes or apartments, Americans on the move historically make up a major chunk of self-storage customers.

apartment for rent

Will 2014 see a rise in apartment rentals?

Urban Appeal
In the apartment market, where will most of the movement take place? Big cities, according to online real estate marketplace Trulia.

“Urban apartments, not single-family homes, will be the first stop for many young adults when they finally move out of their parents’ homes and become renters,” Trulia said in its 2014 housing forecast.

Movin’ On Up
As for the home market, more American homeowners might be graduating to bigger places. Ryan Halset, a Realtor at Boardwalk Real Estate in Seattle, said he thinks 2014 will be a big year for “move-up buyers.”

“The past four or five
 years have been an incredible opportunity for first-time homebuyers and
 investors to enter the market, but with home affordability worsening, first-time homebuyers and investors will make up a smaller percentage of the 
market compared to recent years,” Halset said. “The increase in values over the past 
couple of years will allow current homeowners to sell their homes without 
taking a loss, allowing them to move up to larger homes.”

Bill Plattos, executive vice president of First Team Real Estate in Southern California, said he expects an uptick in condo sales in 2014, as Americans continue to closely monitor their expenses and increasingly ditch home maintenance.

“Since the recession, people have been living more frugal lifestyles, and they will continue to do so, which will be reflected 
in more condo sales in 2014,” Plattos said.

Salt Lake City

Forecasters expect Salt Lake City to be among this year’s hottest housing markets.

Hottest Markets
Where will the home market be the hottest in 2014? Austin, TX; Bethesda, MD; Charlotte, NC; Denver; Houston; Raleigh, NC; Salt Lake City; and Seattle pop up in at least a couple of forecasts.

This is how Zillow sees it (descending order):

  1. Salt Lake City
  2. Seattle
  3. Austin, TX
  4. San Jose, CA
  5. Miami
  6. Raleigh, NC
  7. Jacksonville, FL
  8. San Diego
  9. Portland, OR
  10. Boston

Over at Trulia, the 10 housing markets to watch in 2014 (alphabetical order) are:

  • Bethesda, MD
  • Charlotte, NC
  • Denver
  • Fort Worth, TX
  • Nashville, TN
  • Oklahoma City, OK
  • Raleigh, NC
  • Salt Lake City
  • Seattle
  • Tulsa, OK

Trulia offers a second list for 2014—this one singling out the 10 “back to normal” housing markets (alphabetical order):

  • Austin, TX
  • Bethesda, MD
  • Dallas
  • Denver
  • Houston
  • Nashville, TN
  • Orange County, CA
  • San Francisco
  • San Jose, CA
  • Seattle

Meanwhile, the National Association of Realtors picks these as the 10 housing markets (descending order) to watch for a “housing turnaround” in 2014:

  1. Salt Lake City
  2. Naples, FL
  3. Tampa, FL
  4. Atlanta
  5. Boise, ID
  6. Houston
  7. Charlotte, NC
  8. Denver
  9. Seattle
  10. Tucson, AZ

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  • d irvin

    We are at an intriguing pivot-point in the economy. One issue is whether the fed will go on and taper QE as planned, or let the cheap money keep flowing. Wall Street investors went on a buying spree and became big landlords, largely due to the availability of cheap money. I wonder whether institutional investment in real estate will decline as rates rise, or will fewer traditional buyers make it that much easier for Wall Street to scoop up residential?

  • Wally West

    I don’t know what I would do without my storage unit because I don’t have any room for that stuff in my house. I use my storage unit for all of my holiday decorations and I usually go all out for Halloween and Christmas. I have a lot of items in that unit and it is really nice to have them taking up space somewhere else other than my home. My wife really appreciates it also.