Archive for January, 2014

Trulia’s Housing Predictions: How 2014 Will be Different

January 22, 2014

Since I didn’t think I could word it any better, I have copied and pasted this article, written by Jed Kolko, Chief Economist for Trulia. It was written on December 11, 2013. All rights reserved by Trulia.

Do you have your Crystal Ball to tell you what the real estate market will be like in 2014? I don't, but this is a great assessment!

Do you have your Crystal Ball to tell you what the real estate market will be like in 2014? I don’t, but this is a great assessment!

Next year looks to be the year of the repeat home buyer, as worsening affordability discourages first timers and investors; also, the buying process will be less frenzied. Hot markets to watch are primarily in the South, Plains, and Mountain states. Rental activity will swing back toward urban apartments, away from single-family homes.

The housing market continued its uneven recovery in 2013 and will enter 2014 closer to normal than it was a year earlier. Consumer optimism is climbing back: in Trulia’s latest survey, 74% of Americans said that homeownership was part of achieving their personal American Dream – the highest level since January 2010. Even among young adults (18-34 year olds), many of whom struggled through the recession and are still living with their parents, 73% said homeownership was part of achieving their personal American Dream, up from 65% in August 2011. Rising prices over the past two years have been great news for homeowners, especially for those who had been underwater, and the real estate industry has benefited from both higher prices and more sales volume.

At the same time, the effects of the recession and housing bust still sting: the barriers to homeownership remain high, and a few markets – mostly in Florida – still have a foreclosure overhang. Plus, the housing recovery itself brings its own challenges, including declining affordability and localized bubble worries, especially in southern California.

Barring any economic crises, the housing market should continue to normalize. Here are 5 ways that the 2014 housing market will be different from 2013:

  1. Housing Affordability Worsens. Buying a home will be more expensive in 2014 than in 2013. Although home-price increases should slow from this year’s unsustainably fast pace (see #4, below), prices will still rise faster than both incomes and rents. Also, mortgage rates will be higher in 2014 than in 2013, thanks both to the strengthening economy (rates tend to rise in recoveries) and to Fed tapering, whenever it comes. The rising cost of homeownership will add insult to injury in America’s least affordable markets: in October 2013, for instance, 25% or less of the homes listed for sale in San Francisco, Orange County, Los Angeles, and New York were affordable to middle class households. Nonetheless, buying will remain cheaper than renting. As of September 2013, buying was 35% cheaper than rentingnationally, and buying beat renting in all of the 100 largest metros. However, prices and mortgage rates might rise enough to tip the math in favor of renting in a couple of housing markets – starting with San Jose.
  2. The Home-Buying Process Gets Less Frenzied. Home buyers in 2014 might kick themselves for not buying in 2013 or 2012, when mortgage rates and prices were lower, but they’ll take some comfort in the fact that the process won’t be as frenzied. There will be more inventory on the market next year, partly due to new construction, but primarily because higher prices will encourage more homeowners to sell – including those who are no longer underwater.  Also, buyers looking for a home for themselves will face less competition from investors who are scaling back their home purchases (see #3, below). Finally, mortgages should be easier to get because higher rates have slashed refinancing activity and pushed some banks to ramp up their purchase lending. Moreover, the new mortgage rules coming into effect in 2014 will give banks better clarity about the legal and financial risks they face with different types of mortgages, hopefully making them more willing to lend. All in all, more inventory, less competition from investors, and more mortgage credit should all make the buying process less frenzied than in 2013 – for those who can afford to buy.
  3. Repeat Buyers Take Center Stage. 2013 was the year of the investor, but 2014 will be the year of the repeat home buyer. Investors buy less as prices rise: higher prices mean that the return on investment falls, and there’s less room for future price appreciation. Who will fill the gap? Not first-time buyers: saving for a down payment and having a stable job remain significant burdens, and declining affordability is also a big hurdle for first-timers. Who’s left? Repeat buyers: they’re less discouraged by rising prices than either investors or first-time buyers because the home they already own has also risen in value. Also, the down payment is less of a challenge for repeat buyers if they have equity in their current home

    Biggest Obstacle to Homeownership

    All adults

    18-34 year-olds only

    Saving enough for a down payment



    Not having a stable job



    Having a poor credit history



    Qualifying for a mortgage



    Unable to pay off existing debt



    Rising home prices



    Rising mortgage rates



    Limited inventory



    Among renters who wish to buy a home right now. Respondents could choose multiple options. Survey conducted November 2013.
  4. How Much Prices Slow Matters Less Than Why And Where. Prices won’t rise as much in 2014 as in 2013. The latest Trulia Price Monitor showed us that asking home prices rose year-over-year 12.1% nationally and more than 20% in 10 of the 100 largest metros. But it also revealed that these price gains are already slowing sharply in the hottest metros. How much prices slow matters less than why. If prices are slowing for the right reasons, great: growing inventory, fading investor activity, and rising mortgage rates are all natural price-slowing changes to expect at this stage of the recovery. But prices could slow for unhealthy reasons, too: if we have another government shutdown or more debt-ceiling brinksmanship, a drop in consumer confidence could hurt housing demand and home prices. Where prices change matters, too. Slowing prices are welcome news in overvalued or unaffordable markets, but markets where prices are significantly undervalued and borrowers are still underwater would be better off with a year or two of unsustainably fast price gains.
  5. Rental Action Swings Back Toward Urban Apartments. Throughout the recession and recovery, investors bought homes and rented them out, sometimes to people who lost another (or the same!) home to foreclosure. In fact, the number of rented single-family homes leapt by 32% during this period. Going into 2014, though, investors are buying fewer single-family homes; loosening credit standards might allow more single-family renters to become owners again; and fewer owners are losing homes to foreclosures to begin with – all of which mean that the single-family rental market should cool. At the same time, multifamily accounts for an unusually high share of new construction, which means more urban apartment rentals should come onto the market in 2014. Urban apartments will be the first stop for many of the young adults who find jobs and move out of their parents’ homes. In short, 2014 should mean more supply and demand for urban apartment rentals, but slowing supply and demand for single-family rentals. Ironically, economic recovery means that the overall homeownership rate will probably decline, as some young adults form their own households as renters. Still, the shift in rental activity from suburban single-family to urban apartments would be yet another sign of housing recovery.

What other reasons will cause 2014 be different? New local markets will take the spotlight. Our top 10 markets to watch are entering 2014 with strong fundamentals, including recent job growth and longer-term economic success, as well as recent construction activity typical of vibrant markets. They are, in alphabetical order:

Why are so many of the high-profile markets of 2013 missing from our list? We ruled out markets that were more than a little overvalued according to our latestBubble Watch, which eliminated most metros in Texas and coastal California. We also struck markets with a large foreclosure inventory (thanks for the data, RealtyTrac), like most of Florida. Our 10 markets to watch, therefore, should have strong activity in 2014 with few headwinds.

Finally, our most certain prediction: Trulia will be giving you the inside scoop on the housing market in 2014. Our Housing Barometer will track the recovery; our Price and Rent Monitors are the earliest leading indicators of how asking prices and rents are trending nationally and locally; our Rent vs Buy reports will lay out all the math; and we’ll keep analyzing home-search patterns, demographics trends, affordability, and more. We can’t wait for the year to begin.

Jed Kolko, Chief Economist

Jed Kolko, Chief Economist

Jed leads Trulia’s housing research and provides insight on market trends and public policy to major media outlets including TIME magazine, CNN, and numerous others. Jed’s background includes a Ph.D. in Economics from Harvard University and more than 15 years of publications and research management in economic development, land use and housing policy, and consumer technology adoption.

Making 2014 the Greatest Year Ever!

January 7, 2014
What is your New Year's Resolutions? Do you have your goals? Make 2014 the best year ever!!!

What is your New Year’s Resolutions? Do you have your goals? Make 2014 the best year ever!!!

As we enter into a new year, it is important to establish your goals or resolutions that will make it a successful year. I know what you are going to say about resolutions…they are useless and are typically broken before the end of January. Yes, this is true in most situations, but there are ways to ensure your goals/resolutions are a success.

I am not a personal expert on reaching goals and achieving resolutions, as I haven’t always been successful with mine, but the one driving theory with any goal is to plan it out. A goal without a plan of action is basically a dream. We all have dreams but how many achieve our dreams? This is where you must have an established plan.

Once you have your plans, you have to break it down into monthly, weekly and even daily activities you will need to perform in order to reach your ultimate goals.

Goals should be grand, but attainable. Goals need to be measurable and transferable to an action. In other words, your goal cannot simply be to become a millionaire unless you have the means to make it a reality. If you do not have the expertise that will assist you with becoming a millionaire, then you will need to first take the measures to learn how to achieve this goal before you can take action to make it happen. You cannot learn to run before you have learned  to walk.

You should have a well-rounded set of goals that can include professional, personal, spiritual and many more. I have never met a person who on their death-bed said they wished they had spent more time at the office. With this in mind, you have to focus on your personal as well as your professional/business goals.

I have several actionable goals/resolutions for 2014 that will make this the greatest year for me in my 45 years on this planet. I am also taking it to the level where I have developed a plan to reach these goals. For the sake of accountability, I wish to express my goals and resolutions for 2014. In fact, you may be able to assist me in reaching  some of my goals as ultimately, I am hoping to improve my business in the new year.

My first goal/resolution as it pertains to my business is I would like to improve my sales volume by 50%. I experienced a 90% increase in business for 2013, so this is an attainable goal. I plan to continue to reach out to my database, social media and continue to build my brand in order to accomplish this goal. I also plan to spending more time on the 20% of activities that directly correlates to 80% of business growth. In other words, I am going to try to eliminate those activities I have traditionally done that results in little business growth. This is where you can help me as your referrals can mean the difference between reaching my goals and falling short.

On a personal level, I plan to get at least two books published, possibly a third. One book, My First Home, has been written for some time, but I plan to get it proofed by a real estate expert for legal reasons and then get it self-published. I have already started the track to get it published and have an expert reading it. I should have it ready for distribution by the Spring of 2014. The other book is a novel that I have spent most of 2013 writing. I finished the initial draft at Christmas and will spend the next couple of months doing personal edits and additions. Not knowing how long this will take, I am hoping to get it done by the end of February or the beginning of March. Once I get this second draft, I will employ a professional editor to review the book to get it ready for publication. The next step will be to shop the book around to publishers. If I fail to get it published, I may decide to self-publish it, but my ultimate goal is to get it published by an established publishing house. I am also considering other social media avenues to generate a buzz about the novel to assist a publisher in wanting to publish it. I have other ideas for books that I may start working on in 2014, but the ultimate goal is to get these two projects completed.

Another personal goal is to get more healthy. I hope to reduce my weight by 50 pounds in 2014 and have already started the process by building a diet plan that will work for me. I am keeping track of my food intake to ensure I do not overeat while planning times to exercise. In this vein, I would like to utilize my love of biking and get out with my bike more often. Once it warms up a little, I will make a plan to ride at least once a week while utilizing the Greenway system in Raleigh.

Of course, I have other spiritual and familial goals which I will not share here, but I am establishing a plan of action to accomplish these goals as well. Ultimately, I will hang the final goals in my office to be a constant reminder that I have these goals. Every week, I will establish a weekly ‘to-do’ list that will push me closer to accomplishing all of my goals. This is important to make your resolutions and goals a reality. You need to break them down into daily and weekly occurrences in order to ensure you stay focused on the ultimate prize…your goals.

I hope this has been helpful for you and I would love to hear from you concerning your personal goals and resolutions. Like I mentioned earlier, it is important to make yourself accountable and the easiest way to do this is to share it with others. It is often a daunting task to share your most inner personal goals with family and friends, so this can be an easy way to do it that allows for a bit of anonymity.

Let’s together, make 2014 the best year ever!!!