Buyers and Sellers: Why not make a move now that you know where the market stands?
Today we share with you an article that senior vice president and managing
officer of Intero, Alain Pinel wrote entitled, Nice
Road Ahead…But Watch Out For The Land Mines! Of course there are
already predictions being thrown around for 2014, will the Real Estate market
get better or worse? Will Sellers fair better or Buyers? A lot of those answers
are still unknown but predictions on the growth are already happening; the
question is: why wait until the unknown of 2014 when we already know how it is
in 2013?
“We are not done with 2013. Another 11 weeks to go before we can make a final judgment on what kind of a year it was in the real estate industry. We’ll do that in due time, but now it’s more exciting to talk about next year. Perhaps the predictions will encourage homebuyers or home sellers to wait…Or perhaps it will go the other way and press them to act on their desire now rather than gamble on next year.
These days, predicting the future is not an easy task. We have been driving blind through the summer months, so making projections for all of next year looks a bit hazardous and even futile. It does not hurt to try though; just don’t rely too much on what you read and hear on the subject to make a life decision…
Last week, I was at a power-meeting with lots of brains from NAR (National Association of Realtors) and a good mix of top US brokerages. When asked about their take on next year, the popular answer from around the table was “cautious optimism.” I kind of like this answer because it can be interpreted any way you want. It’s like saying that you look forward to a good year, but with your fingers crossed. I know the feeling.
Some real estate experts are more optimistic than cautious, while others may be more cautious than optimistic. When looking at 2014 through a crystal ball, it is hard to know on which one of the two words of this apparent oxymoron to put the emphasis. There are too many “ifs” to take into account at this time, confusing logical minds.
NAR is usually conservative in its forecasts. What do they see for the coming year? An “OK+ year” would adequately describe their thinking. Units Sales should be flat, that is at the level of 2013, and the dollar volume of sales should go up a modest 6%, thanks to the average national median price edging up that much. We’ll take it. Nothing to be excited about but at least it goes in the right direction.
Another prediction can serve as a good reference: the Wall Street Journal Economists Panel (of which the chief economist for NAR is a part) predicts that prices will go up 5% in 2014. It looks like a fairly safe bet since the same panel was counting on a 7% increase this year and, as we know now, prices will jump about twice as high.
However warm or lukewarm its forecast may be, NAR is fast to warn that there are risks that could potentially alter the outlook. The first can be placed under the title “Washington policies” and could affect our industry, mortgage financing and/or the Principals. Here is a sample of issues which could result in the trimming of homeownership deductions or reduce access to mortgage credit:
2013, in the real estate business, has been pretty good so far. The balance of the year promises to be interesting. Next year even more so. Many of the land mines planted on the long road to recovery will represent a challenge for real estate buyers, sellers and practitioners. You know the list for being reminded 24/7 every time you turn the TV: fiscal cliff, sequester, downgrading of US credit, budget deficit, scaling back on easy money policies, rising interest rates, government shutdown, debt ceiling crisis… What’s next?
What do I think about 2014?…I am “optimistically cautious”!… One piece of advice though for those of you looking to buy or sell: do it now. At least you know what you are dealing with. Why would you want to wait?”
“We are not done with 2013. Another 11 weeks to go before we can make a final judgment on what kind of a year it was in the real estate industry. We’ll do that in due time, but now it’s more exciting to talk about next year. Perhaps the predictions will encourage homebuyers or home sellers to wait…Or perhaps it will go the other way and press them to act on their desire now rather than gamble on next year.
These days, predicting the future is not an easy task. We have been driving blind through the summer months, so making projections for all of next year looks a bit hazardous and even futile. It does not hurt to try though; just don’t rely too much on what you read and hear on the subject to make a life decision…
Last week, I was at a power-meeting with lots of brains from NAR (National Association of Realtors) and a good mix of top US brokerages. When asked about their take on next year, the popular answer from around the table was “cautious optimism.” I kind of like this answer because it can be interpreted any way you want. It’s like saying that you look forward to a good year, but with your fingers crossed. I know the feeling.
Some real estate experts are more optimistic than cautious, while others may be more cautious than optimistic. When looking at 2014 through a crystal ball, it is hard to know on which one of the two words of this apparent oxymoron to put the emphasis. There are too many “ifs” to take into account at this time, confusing logical minds.
NAR is usually conservative in its forecasts. What do they see for the coming year? An “OK+ year” would adequately describe their thinking. Units Sales should be flat, that is at the level of 2013, and the dollar volume of sales should go up a modest 6%, thanks to the average national median price edging up that much. We’ll take it. Nothing to be excited about but at least it goes in the right direction.
Another prediction can serve as a good reference: the Wall Street Journal Economists Panel (of which the chief economist for NAR is a part) predicts that prices will go up 5% in 2014. It looks like a fairly safe bet since the same panel was counting on a 7% increase this year and, as we know now, prices will jump about twice as high.
However warm or lukewarm its forecast may be, NAR is fast to warn that there are risks that could potentially alter the outlook. The first can be placed under the title “Washington policies” and could affect our industry, mortgage financing and/or the Principals. Here is a sample of issues which could result in the trimming of homeownership deductions or reduce access to mortgage credit:
- 20% down payment Qualified Residential Mortgage requirement (requires 5% risk retention for securitized loans)?
- Eventual removal of Government guarantee (Freddie Mac/Fannie Mae) on mortgages?
- Trim mortgage interest deduction? (eliminate 2d homes? Reduce cap?)
- Review capital gains tax on home sale?
- Price control of 3% cap on fees for mortgage origination? , (including escrow, title?…)
2013, in the real estate business, has been pretty good so far. The balance of the year promises to be interesting. Next year even more so. Many of the land mines planted on the long road to recovery will represent a challenge for real estate buyers, sellers and practitioners. You know the list for being reminded 24/7 every time you turn the TV: fiscal cliff, sequester, downgrading of US credit, budget deficit, scaling back on easy money policies, rising interest rates, government shutdown, debt ceiling crisis… What’s next?
What do I think about 2014?…I am “optimistically cautious”!… One piece of advice though for those of you looking to buy or sell: do it now. At least you know what you are dealing with. Why would you want to wait?”
This blog is courtesy of The Dawn Thomas Team who is an
award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos
650-701-7822. We help nice people with selling and buying homes in the greater
Silicon Valley and Beyond!
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