Could 2014 really perform any better than the miraculous year of 2013 did in the real estate industry? While that is of course still left to be determined, there nonetheless are signs that this unfolding year will be yet another successful one defined by growth and prosperity for this field of work. Experts at the National Association of Home Builders are predicting that the continued progress in more new single-family homes being built will be the primary reason that 2014s real estate performance will climb to even higher ground.
David Crowe, the Chief Economist at the National Association of Home Builders, elaborated on this optimistic projection and stated, "My single-family forecast for 2014 is pretty aggressive--822,000 starts which is likely 200,000 more than 2013. There are five key points to the turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it." Here on our local level we have certainly seen these trends. Not only is demand flourishing, but the rising prices and increased sales have diminished the amount of available properties for sale. Hence the reason why developers today more than ever are building everything from single-family homes, to condominium and apartment towers, office buildings, retail space, and more in order to satisfy the market.
Year-over-year household formations are now at roughly 620,000. This is far above the 500,000 level that they stood at just a few years ago during the worst times of the housing downturns.
The National Association of Home Builders is also forecasting 1.15 million total housing starts this year, which is up by a lofty 24.5% over 2013s still impressive figure of 928,000 units.
For single-family units, there are 822,000 expected to be built this year, a 32% year-over-year rise, and an even further 1.16 million single-family homes to be built in 2015; a 41% rise.
333,000 multi-family home starts will occur in 2014, up by 9% over last years 306,000
When looking at the total sales, single-family homes across the country will hit around 584,000 this year, up by a significant 35.9% over 2013s 430,000 sales.
If any hesitation exists over mortgage rates, it must be noted that in thriving markets of the past, rates were still far higher than they have been now. While 2013 was marked by record low numbers to begin the year, the slight uptick is certainly nothing to worry about, as the Vice President and Chief Economist of Freddie Mac, Frank Nothaft, reports, "Regarding mortgage rates, we've gone from dirt cheap to cheap, and I think we will see a gradual rise of about a half a percentage point to 5 percent in 2014," said Nothaft. But even then, he said, "most markets will remain quite affordable." Indeed it is looking to be a brilliant year for home construction. Not only will this help the job market and broader economy, but the needed boost to the inventory levels will set the platform for prolonged success in the real estate market for 2014 and beyond.
More Information: National Association of Home Builders