With “Pre-Bubble” annual price appreciation for
the past 30 years at 3.6% what can we expect for the next year? The next
four years? Since 2007, after prices fell 5.9% on an annual basis between
2007 and 2011, they have recovered with an annual appreciation of 6.4% during
2013. National
appreciation rates are expected to slow considerably in 2014. Nationwide, home values are expected to rise
another 4.8 percent through December 2014, according to the Zillow Home Value
Forecast. Then,
the price appreciation will level off to between 3.6% and 4.2%. This
information was compiled from a panel of economists, market and investment
researchers and real estate experts. Even if we assume the most
conservative 3.6% appreciation starting in year 2015, this amounts to a 20%
gain in home values over the next four years.
What
will happen to rates during this same time period? "Look for rates for 30-year mortgages --
now at around 4.45% -- to climb to between 5% and 5.5% next year. Note that, although significantly above the 3%
to 3.25% rates that were available in early 2013, rates of 5% to 5.5% are still
historically very modest. To anyone who bought a house in the 1970's or
early 1980's, they'll still seem ridiculously low." Glenn Somerville
reports from Kiplinger.
What
does this mean for buyers? With increasing monthly mortgage payments, fewer
buyers will qualify as seen on the following projections chart.
