Looking ahead to trends in 2014
As 2013 comes to a close, we are wrapping up a fairly strong year for Northwest Vermont's real estate market. The year marked a continuation of our region's steady gains, helped by our market's resilience through the economic downturn and recovery. Through early December, median home sale pricing in our region improved by more than 2%.
In many towns, homes went under contract at a faster pace than in 2012, boosted by a stronger economy, lower unemployment and a bump in consumer confidence.
But as we close out the year, it's a good time to take stock and consider which national and local trends might affect our real estate market in 2014.
With the Federal Reserve anticipated to eventually raise rates and taper its quantitative easing program, many buyers and sellers are concerned about the impact on mortgage rates, which have already crept upwards.
How will the Fed and trends in the U.S. and local economies impact you? Read on.
The national property market
The U.S. real estate market is poised to show more growth in 2014
, with gains expected to keep pace with this year, according to a November session of the country's biggest mortgage lenders. So far through October, the national median existing-home price has surged more than 12%.
With inventory tightening this year, prices may continue to see an upward tick in 2014, according to the National Association of Realtors. A five-month supply of inventory is currently available.
Lawrence Yun, the chief economist for the National Association of Realtors, says that the lower inventory level will push up home prices in "most of the country." He adds, "More new home construction is needed to help relieve the inventory pressure and moderate price gains."
With the Federal Reserve expected to start hiking rates in 2015 and taper its QE program next year, rates will likely continue to rise over the coming months, according to NAR's Yun.
The average interest rate on a 30-year mortgage may jump to 5.4% in 2014, up from about 4.3% in early December, Yun forecasts. That may dampen some buyers' abilities to purchase new homes, with NAR expecting the number of existing home sales to remain flat in 2014 because of the higher rates.
Our local Vermont market
Vermont has benefited from a low unemployment rate, while taking part in the overall U.S. recovery from the recession. Within Northwest Vermont, growing businesses such as Green Mountain Coffee Roasters are hiring, bringing new homeowners to our region and boosting the economy.
Employment figures are expected to strengthen, with the New England Council (NEC) forecasting the state's unemployment rate to remain at 4.2% for 2014 and then decline to 3.7% by 2017. At that point, Vermont's unemployment rate would be a full 2.3 percentage points below the forecasted U.S. average, according to the NEC.
Housing prices will also strengthen in the coming years, with the NEC forecasting a 1.5% increase in 2014. The gains may be smaller than what other U.S. regions report, but that is because Vermont weathered the housing downturn relatively unscathed and avoided the boom-and-bust trend seen by some other states.
Are the holidays a good time to sell?
Conventional wisdom has long held that the holidays serve up a heap of "Bah! Humbug" to home-sellers. But while that might have been the case a decade ago, technology and the dynamics of today's market means that buyers are always looking.
Because fewer sellers put their homes on the market during the holidays, this time of year can create an opportunity for your listing to stand out.
Lastly, because of the forecast for higher mortgage rates in 2014, buyers may be seeking a chance to find their dream home AND lock in a low rate.