Since the mortgage crisis, one of the driving forces behind the housing market’s recovery has been home price appreciation, which is expected to continue in 2014. As a result, people looking to buy a house in Charlotte may want to prepare for higher sale prices.
The CoreLogic Case Shiller Indexes predict 5.3 percent home price appreciation in 2014, following an 11.3 percent year-over-year increase in the fourth quarter of 2013. The annual projection is higher than the long-term average of 4.5 percent growth since 1975.
“Limited construction of new homes and low inventories of existing homes for sale contributed to the jump in prices,” said Dr. David Stiff, principal economist for CoreLogic Case-Shiller. “Developers remain cautious about building too many new houses until they see stronger demand in their markets.”
Many metropolitan areas are experiencing strong appreciation, with Las Vegas seeing a 26 percent increase from the fourth quarter in 2012, followed by a 24 percent jump in Riverside, California, and 23 percent hike in Oakland, California.
“There are a number of metropolitan areas that have reached new price peaks, including Houston, Dallas, Denver, Honolulu and Pittsburgh,” Dr. Stiff said. “These cities have never achieved price levels quite this high, not even in the record year of 2006.”
Declining mortgage rates could keep affordability high
With prices on the rise, homebuyers may be afraid of being priced out of the market. However, fixed mortgage rates have decreased to new lows for this year, which could help prevent such a situation.
Buyers in Charlotte worried about affordability would be smart to jump in the market as soon as possible, as the average 30-year fixed-rate mortgage dropped to the lowest level since November 7, 2013 in the week ending May 8, according to Freddie Mac’s latest Primary Mortgage Market Survey. This loan option dropped to 4.21 percent, compared to 4.29 percent in the previous seven day period.
Meanwhile, 15-year FRMs averaged 3.32 percent, from 3.38 percent one week prior. A year ago at this time, this loan option was at 2.61 percent. Falling mortgage rates can be attributed to a number of factors, Freddie Mac vice president and chief economist Frank Nothaft said.
“Mortgage rates continued moving down following the decline in 10-year Treasury yields after a dismal report on real GDP growth in the first quarter,” Nothaft said. “Meanwhile, the economy added 288,000 jobs in April, the largest since January 2012, and followed an upward revision of 36,000 jobs for the prior two months. Also, the unemployment rate fell to 6.3 percent.”
Affordability could be a major concern of buyers this spring. Fortunately, mortgage rates are creating favorable conditions. Having a large down payment could get a buyer even better terms on a home loan – and help cancel out rising prices.
Those interested in moving forward on a local housing acquisition, or hoping to sell a house in Charlotte, can benefit by partnering with Lodestone Real Estate. The trusted agency has helped hundreds of individuals successfully navigate the path to homeownership during its years in operation.