Good News for Landlords: Rents Still Rising – Bad News for Tenants

Good News for Landlords: Rents Still Rising  –  Bad News for Tenants

The article below is both good and bad news.  For investors, whom have scooped up deals on the San Francisco Peninsula through the bust, they are raking in the gold with high rents.  For the rentals properties I service, it’s been amazing to see the increase in rent year over year.  But demand is there – and with few homes to buy – the rental market is booming.

For those who are renting, they cringe when they see a letter from their landlord in the mailbox.  Several clients of mine have emailed me this year concerned that their rent went up.  Some as little as $50 – other a more substantial jump.  These renters are the first time buyers of the future.  Skipping dinners out to stash away cash for down payments and closing costs.  And around here – where the median home price starts at $800,000 – we’re not talking pennies and dimes that need to be saved.

Right now the cheapest rental listed on the Multiple Listing Service is a 3 bedroom 1 bath home of about 1050 square feet in the Buri-Buri area of South San Francisco – asking rent is $3,000.  The most expensive rental is a dated but spacious 3 bedroom 4 bath home of close to 4000 square feet in Portal Valley asking for $9,500 a month.  The median rental listed today is a 3 bedroom 2 bath condo in Menlo Park listed at $4,250 a month.

Suddenly that $50 rent increase doesn’t sting as much.

But the word is out – the Bay Area is a wonderful place to live and we’re all paying for it now.  Enjoy this article below…

 

Good News for Landlords: Rents Still Rising

 

Average rental prices have ticked up nearly 4 percent nationwide, according to the latest TransUnion Rental Screen Solutions industry report of data collected from property managers in September 2012 and September 2013.

Rents were on the rise for all four of the classifications of rental properties that TransUnion analyzes: newer institutional properties; older institutional properties; older properties in less desirable areas; and older properties in less desirable areas that are in need of renovations/updating. The average rent of all four types of properties was $1,072 in 2013.

The largest rental increases were seen in properties that were in less desirable areas that need renovations, up 4.2 percent to an average of $693.

“The rental market continues to be strong as demand for rental units remains high while consumer credit risk slowly improves,” says Michael Doherty, senior vice president of TransUnion’s rental screening solutions group. “The combination of improving rental risk scores and continued demand for rental properties is particularly good news for property managers. … When the credit risk of the population improves, property managers may be more inclined to tighten their criteria to ensure they are getting the best possible resident. This is integral because a resident who ‘skips’ out on a lease can cost a property manager thousands of dollars in lost revenues.”

By: DAILY REAL ESTATE NEWS

 

I read this article at:  http://realtormag.realtor.org/daily-news/2014/01/28/good-news-for-landlords-rents-still-rising?om_rid=AACmlZ&om_mid=_BS6BpXB838Asq2&om_ntype=RMODaily

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office:  650-365-9200

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Connect with us professionally at LinkedIn:  http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

5 Traits to Look for in Your Agent – Great Article to Share

The Caton Teams strives for excellence. We are always learning, growing in our efforts to be the best agents we can be. I enjoyed reading this article and would love your feedback. Enjoy!

5 Traits to Look for in Your Agent
By Tara on Trulia

In this internet era, we’ve gotten to a place where we require all of our information in bite-sized, white-and-charcoal grey pieces. But when it comes to creating interpersonal and professional relationships that really work, lists of interview questions and “what to Google” articles can fall short of fully fleshing out the factors that make us mesh with someone.
So let’s go a little deeper. Picking a real estate agent is a business and a relationship challenge – one which has a potentially massive impact on your finances and future enjoyment of the place you and your family live. If you take that seriously, here are a handful of characteristics I recommend you look for as you evaluate prospective agents.

1. Creativity. Some transactions go precisely as planned, clicking right along on schedule. Others – many others – get messy:
• the loan underwriter issues bizzaro, last-minute document demands
• the appraisal comes in low
• the buyer backs out
• you see 50 homes without any winners, or
• the inspection reports reveal issues that make you wonder whether the home is a diamond in the rough or a money pit.
Whether your transaction will be easy-peasy or uber-messy, you cannot know until you’re in it. When you’re agent-hunting, it behooves you to look for someone who has the experience and creative problem-solving skill to help you methodically think through the facts, surface alternatives, propose solutions and engineer obstacle workarounds – just in case the going gets tough.

Problem solving is the core of any business. We’ve had plenty of bumps in the road, but together we get over the humps and bumps and come up with solutions that work for all parties involved.

2. Deep, varied expertise. Buying or selling a home is much more of a lifestyle design experience than it is a financial transaction, truth be told. To do it with results that work well for yourself, your family and your finances for the duration, you need an agent that’s an eager partner with you. One that will deep-dive into all the nooks and crannies of your aesthetics, your psychology, your life plans, your financials and even your relationship dynamics.
You also need an agent with deep – not surface – understanding of homes, neighborhoods and local real estate market metrics, practices and contracts, and someone who deeply *gets* the home buying or selling process itself – so they can brief you on it and fruitfully coach you through it.
Have you ever taken a class from a novice teacher vs. a class from an experienced professor? The difference is nuance: a deep, mature understanding of a complex subject allows the more experienced instructor to give you insights into patterns they’ve spotted over time and repeat transactions. Same goes for your real estate pro: you want to make sure that either your agent or someone that will be working with them on your transaction (like their manager or broker) has deep knowledge and understanding in most or all of these areas, so they can share the nuanced insights and patterns they have spotted in the past which you can harness to your advantage in the present.

With Susan in the business for over 15 years and myself hitting the 10 year mark – we’ve have a wide range of experience. From embarking on home addition, to DIY remodeling, to buying your first home and your last. Each moment is a teaching opportunity.

3. Calm resilience. When you lose out on a home to other offers, it can feel like the end of the world. When you list your home, stage it to the nines, and not a single offer is forthcoming, feelings of discouragement, frustration and even depression can easily arise. In both cases, it’s easy to delve into fear (fear that you’ll never get the home you need, or will never be able to move on to the next stage of your life) or paralysis (freezing up because you just don’t know what to do – period).
A great agent – and there are thousands and thousands out there – can bring a massive, game-changing dose of calm resilience to the table. They’ve been through this before. They know that there are lots of homes and lots of buyers out there, so losing out on any one is not a death knell to your dreams. They also know how to tell the difference between a normal delay in receiving an offer or an acceptance on your market and when your approach requires some serious course correction (see #4, below).
A great agent will be able to receive the news that you’ve lost out on a home or take in negative feedback from a prospective buyer, call you and deliver it calmly and right along with some smart, constructive suggestions for action items you should work on next, to keep the process moving forward.

Being patient and calm is what it takes in Real Estate. We’ve had a share of surprises and a level head always prevails. It’s our job to weather the storm, buffer the waves and get you to your port safely.
In this competitive San Francisco Peninsula market – we’ve had to make our share of some disappointing phone calls. However, looking back – each sad call was eventually followed by a fantastic happy call. So much so – Susan and I believe in never giving up – because we when it’s meant to be – it will be. Add some professional insight, write strong offers and keep your options open and we’ll definitely be handing over the keys to your new home soon.

4. Frankness and optimism. You want – no – you need your agent to be frankly honest. You need them to be frankly honest with themselves and with you about all facets of the reality you’ll face as you proceed through your transaction. Sellers, you cannot afford to have an agent who will let you persist in fantasy-land beliefs about what your home is worth – contrary to all evidence as to what homes in your area are actually selling for and feedback (read: silence) from prospective buyers who have seen your home – without challenging you to look at the data and adjust your pricing strategy. Buyers, by the same token, you can’t afford to work with an agent who encourages or allows you to make 5, 10, or 15 lowball offers on a home without urging you to face the truth that you need to house hunt at lower price points or make higher offers in order to be successful.
You need an agent who is willing to tell you the truth and have these sorts of hard conversations with you even when you won’t like it.
That said, you want an agent who possesses both this frank integrity and an ultimate optimism that, with right thinking and strategic action, you can and will ultimately succeed at making a great buy or sale.

Tara nailed it with this one. I am very honest. I am rather blunt sometimes, I do not beat around the bush. Real Estate is serious business, some of the largest decisions and purchases in one persons life. I need to be frank with you and you need to be open with me. Honest communication is a huge part of any relationship and in real estate – it is one of The Caton Teams core values. Work with an agent you feel comfortable talking to. We’ll be talking a lot!

5. Bandwidth. This one might sound strange, but the fact is that it can be difficult to get the advantages of having the best agent in the world if the agent is wildly over-subscribed and so busy they struggle to respond to calls and emails. This is why I don’t always say a great agent will necessarily have years and years of expertise. Some agents who have wonderful experience and wisdom are simply too busy to do the time-intensive guidance your situation may require. And some agents who are new to real estate bring highly relevant expertise and skills they’ve developed in other careers, have ample time to devote to your transaction and can enlist the real estate-specific insights of an experienced team leader, manager or broker.
If you know you’re going to want to meet up weekly for a house hunting session or debrief with your agent, tell them this up front and ask them flat-out how much time they can devote to your process. Make sure you’re comfortable with their response or solution (example – their listing specialist or partner can meet with you when they can’t) before you make your pick.
My advice for agent-finding is to engage in a multi-step process:
• First, make sure you get referrals from your friends, colleagues and relatives to the agents they have worked with and love.
• Also get a few names from our Agent Finder on Trulia, which allows you to get incredibly specific about what sort of homes, areas and transactions your ideal agent will have worked with.
• Then, check all of your prospective agent candidates out online. Narrow them down a bit by what you see in terms of reviews and style of advice you see them providing on channels like their blog, website or social media pages.
• Reach out to all the people on your short list through whatever medium you prefer to communicate – phone, email, etc. – and note how quickly you get responses.
• Then book appointments to meet with a handful of agents and let them present their method to you.
• Get references and check in with those past clients – ask them to tell you about their transaction experience, warts and all.
By the end of this process, you’ll likely find someone who fits just-right with your own personality, timing and transactional needs and possess these five traits.

I truly enjoyed reading this and hope you did too!

I read this article at: http://corp.truliablog.com/2014/01/09/5-traits-to-look-for-in-your-agent/?ecampaign=cnews201401B&eurl=corp.truliablog.com%2F2014%2F01%2F09%2F5-traits-to-look-for-in-your-agent%2F
Remember to follow our Blog at: https://therealestatebeat.wordpress.com/
Got Questions? – The Caton Team is here to help.
Email Sabrina & Susan at: Info@TheCatonTeam.com
Call us at: 650-568-5522 Office: 650-365-9200
Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp
Visit our Website at: http://thecatonteam.com/
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Check out my photos on Instagram: http://instagram.com/sunshineagogo
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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro
Please enjoy my personal journey through homeownership at:
http://ajourneythroughhomeownership.wordpress.com
Thanks for reading – Sabrina
The Caton Team – Susan & Sabrina – A Family of Realtors
Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

Flood Insurance Update…

Flood Insurance Update
The Senate plans to vote on legislation that would create a 4-year “time out” for both impacted home buyers and future increases on “grandfathered” properties. The Senate Majority Leader has promised the sponsors a vote on S. 1846 Homeowner Flood Insurance Affordability Act which would delay any increases for 4 years; they are currently negotiating the number of amendments and amount of debate time.  The bill is expected to come up the week of January 27 if not sooner, and will require 60 votes to move forward.  NAR issued a call for action and is urging every senator to vote yes.

Is Market Recovery Slowing Down? Great Article from SF Gate

Great article about our local Real Estate market – is recovery slowing down?  Or is supply holding back the reins?

Signs of possible slowdown in housing recovery


By: Kathleen Pender, San Francisco Chronicle & SF Gate

Bay Area home prices rose on a year-over-year basis last month, albeit at a slower pace than earlier in the year, while sales fell to their slowest pace for a December since 2007, DataQuick reported Wednesday.

It was another sign of a potential slowdown in the housing recovery.

On Tuesday, the Mortgage Bankers Association lowered its forecast for 2014 mortgage originations, citing higher interest rates and uncertainty over new mortgage rules that took effect this month.
DataQuick attributed the sales slowdown to a lack of supply, not a lack of demand.
“Demand has been impacted by a roughly one percentage point increase in rates since spring. But we think the bigger deal is the lack of inventory,” DataQuick spokesman Andrew LePage says.
In the Bay Area, 6,714 new and resale houses and condos were sold in the nine counties last month. That was up 0.8 percent from November but down 12.7 percent from December 2012.
Sales are typically higher in December than November, but the seasonal increase is normally much higher – around 8 percent.
The December sales figure was the lowest for a December since 2007, when 5,065 homes sold.
The median price paid for a Bay Area home last month was $548,500. That was down 0.3 percent from November, but 23.9 percent higher than the same time last year. From April through August last year, prices rose 30 percent or more on a year-over-year basis.
More sales in spring

LePage says there will be more homes on the market in spring and summer, when the market typically heats up. Rising home prices will leave fewer homes underwater, so more homeowners will sell because they could make enough to pay off their mortgage. Also, there has been “a little more construction,” LePage says.
“Waiting (to buy a home) will get you more choice, but all bets are off on prices,” he says.
If the current rate of appreciation holds, “the typical home would be selling for $50,000 to $60,000 more by spring.

Perhaps twice that at the upper end of the market,” DataQuick President John Walsh said in a news release.

Tight inventories are also hurting the mortgage industry.

In its forecast Tuesday, the Mortgage Bankers Association predicted that only $1.12 trillion in home loans will be originated this year, down 36 percent from $1.76 trillion in 2013. In October, it predicted that 2014 originations would drop by only 32 percent.

The forecast came out hours after mortgage heavyweights Wells Fargo and Chase announced big drops in fourth-quarter mortgage originations as part of their earnings reports.

The numbers “just kept getting worse through the end of 2013,” says Michael Fratantoni, the association’s chief economist.

The association predicts that home-purchase mortgages will rise just 3.8 percent to $677 billion this year. In October, it was expecting a 9 percent increase.

Refinance originations, it says, will hit only $440 billion, down 60 percent form last year. In October it expected a 57 percent drop.

Higher rates a drag

The main culprit is higher interest rates. Mortgage rates were around 3.5 percent at the beginning of last year but jumped by a full percentage point in May and June. They have been hovering around 4.5 percent since then.

The immediate effect was to slash refinance volume, but home-purchase originations also suffer from a low-rate “hangover,” Fratantoni says. The ultra-low rates that persisted before May “pulled forward some (purchases) that might not have occurred until six months or a year later. Now we are now we are seeing a bit of a payback in terms of lower activity.”

The association predicts that the average 30-year mortgage rate will be above 5 percent by the end of this year and above 5.5 percent at the end of next year.

It also predicts that fewer mortgages could be made this year as lenders narrow their product lineup to conform with the new mortgage rules designed to outlaw some of the abusive lending practices that led to the financial crisis.

The new rules give lenders some protection from borrower lawsuits if they make what is known as a qualified mortgage and the loan goes bad. A loan is not qualified if it has certain features, such as interest-only payments, or if the borrower’s total debt payments (including the mortgage and other debt) exceed 43 percent of gross income.
Over government limit

The new rules apply only to jumbo and other nonconforming mortgages, because all loans that could be bought or backed by Fannie Mae, Freddie Mac, the Federal Housing Administration and other government agencies are automatically deemed qualified.

Government loans account for the vast majority of the mortgages nationwide but a smaller percentage in the Bay Area, where many borrowers exceed the government limit, which tops out at $625,500 for Fannie, Freddie and FHA loans in high-cost areas.

In the Bay Area, 15.4 percent of home-purchase loans exceeded $625,500 in the fourth quarter, but this number ranged from less than 0.4 percent in Solano County to 32 percent in San Francisco, according to DataQuick.

Kathleen Pender is a San Francisco Chronicle columnist. Net Worth runs Tuesdays, Thursdays and Sundays. E-mail: kpender@sfchronicle.com Blog: http://blog.sfgate.com/pender Twitter: @kathpender

I read this article at: http://www.sfgate.com/business/networth/article/Signs-of-possible-slowdown-in-housing-recovery-5146631.php
Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

Visit our Website at: http://thecatonteam.com/

Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

Proposed School Boundary Change

The Sequoia Unified School District proposed a boundary change.  There was a meeting last night – please visit their website for updated information:  http://www.seq.org  or http://www.seq.org/?id=131

Below is a map I obtained from their website with the proposed changes.

20140116-180815.jpg

 

I read this article at:  http://www.seq.org/?id=131

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

 

Got Questions? – The Caton Team is here to help.  

 

Email Sabrina & Susan at:  Info@TheCatonTeam.com

 

Call us at: 650-568-5522  Office:  650-365-9200

 

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

 

Visit our Website at:   http://thecatonteam.com/

 

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

 

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

 

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

 

Connect with us professionally at LinkedIn:  http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

 

Please enjoy my personal journey through homeownership at:

 

http://ajourneythroughhomeownership.wordpress.com

 

Thanks for reading – Sabrina

 

The Caton Team – Susan & Sabrina – A Family of Realtors

 

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

 

 

 

BEST PLACES TO EAT IN SAN MATEO COUNTY – According to me…

BEST PLACES TO EAT IN SAN MATEO COUNTY

Growing up the daughter of a Chef – I know good food.  Living in our beautiful Bay Area – I have good food all around me.

I thought I would share some of my favorite food spots – please share yours too!

SWEET TOOTH

Let’s start with the important stuff – the sweet stuff.

Dear lord my favorite place for sweets is ROMOLO’S CANNOLI at 81 37th Avenue in San Mateo.  They have THE BEST CANNOLI I’ve ever had.  I implore you to go.

I LOVE frozen yogurt – it could be an addiction – but I am ok with that.  One of my favorite places is YUMI YOGURT at 3955 South El Camino Real in San Mateo or 947 El Camino Real in Redwood City.  Man do these guys know what portions should look like – buy a small and bring a friend!

Cake.  Mmmmm Cake.  If this testionmial doesn’t sing – I don’t know what will – but I had my wedding cake made at Copenhagen Bakery & Café at 1216 Burlingame Avenue in Burlingame.  Oh My Goodness, bring your sweet teeth – as my mom would say – because everything in there is divine!

BREAKFAST

One of my favorite meals of the day – especially in the morning.  I love MY BREAKFAST HOUSE at 1137 Laurel Street in San Carlos.  Man do they make a mean raisin bread French toast!

LUNCH / DINNER

My hubby and I have lunch dates and one of our favorite spots is THE AMAZING WOK at 1653 Laurel Street in San Carlos.  It’s super affordable, the food is delicious and they move quick so you can get back to work.

If you have cash on hand, our second favorite lunch date spot is SANCHO’S TAQUERIA at 3205 Oak Knoll Dr in Redwood City.  Terrific fish tacos, tasty burritos –  hits the spot every time.

One of my quick lunch spots  when I’m on the go is also at the Emerald Hills Shopping Center it’s SPEEDERIA PIZZA (with two locations, one at 711 Laurel Street in San Carlos and the other at 3201A Oak Knoll Drive in Redwood City.)  Pizza by the slice, delicious thin crust pizza – I’m drooling just thinking about it.

Guess I like Italian food.  But one of my favorite restaurants for dinner is San Remo’s at 1152 San Carlos Avenue in San Carlos.  Awesome soup, pasta and of course – PIZZA!

Now if you’re in the mood to eat – one of my favorite spots is RAINBOW PIZZA at 112 Crystal Springs Shopping Center in San Mateo.  They have so great food and portions fit for a Greek God!

Now for my ultimate dinner treat.  Hands down SHIKI BISTRO at 825 Laurel Street in San Carlos (man does my hometown downtown have the best food!).  My husband took me there for our wedding anniversary and it was hands down the best dinner we’ve ever had!  And we love food.  Great atmosphere but better yet – some of the most creative sushi I’ve had ever!  It was like the first time I had sushi – amazing!

There are just a handful of my favorite culinary treasures in San Mateo County.  Please let me know what your favorite spots are – I love to try new places and cuisines.

Bon Appétit – Sabrina

PS – This is purely my opinion and none of these business paid to be on the blog.  Thanks for reading!

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Call us at: 650-568-5522  Office:  650-365-9200

Want Real Estate Info on the Go?  Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

Visit our Website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me:  http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn:  http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE#70000218/ 01499008

2014 – What will the Real Estate Market be like?

It’s on my mind – maybe it’s on your mind – but I enjoyed this article about the 2014 market forecast. Enjoy!

The housing recovery hit high gear in 2013 with bigger than expected price gains and solid home sales. This year isn’t likely to be as exciting. Rising mortgage interest rates will price out some potential buyers. Instead of double-digit price gains, look for single-digit ones, economists say, while existing home sales remain at last year’s level.
Sound boring? “You want boring in the housing market,” says Svenja Gudell, Zillow director of economic research.
Here’s what’s ahead for:
• Home prices. They were the highlight of the 2013 housing market, up 12.5% in October year over year, CoreLogic says. Prices are now 20% off their 2006 peaks after falling more than 30%, shows the Standard & Poor’s Case-Shiller index.
Economist John Burns looks for a 6% gain in 2014. Many others see smaller increases ahead. Zillow forecasts just a 3% rise.
Prices will likely rise more slowly as more homes come on the market, fewer investors bid for homes and higher ownership costs — including interest rates and home prices — take a bite out of housing affordability, housing experts say.
Still, U.S. housing remains 4% undervalued when compared with other economic fundamentals, such as consumer incomes and the cost to rent, says Jed Kolko, Trulia economist. At their 2006 peak, home prices were 39% overvalued based on the same metrics, Kolko says.
•Existing home sales. They’ve started to slow. In November, they were down year over year for the first time in 29 months, National Association of Realtor data show.
The dip was driven by higher interest rates and a tight supply of homes for sale. It doesn’t mean the housing recovery has come off the rails, because home prices and housing starts continue to improve, says Capital Economics economist Paul Ashworth.
Existing home sales, which came in at a 4.9 million seasonally adjusted pace in November, are expected to be about 10% higher in 2013 than 2012 and stay about the same at 5.1 million in 2014, NAR forecasts. That’s roughly back to 2007 levels but below the inflated levels preceding the housing crash.
New-home sales, which make up a smaller part of the market, have more room to grow. They hit an annual pace of 464,000 in November, up almost 17% from a year ago but still below the 700,000-a-year pace generally considered healthy.
The new year will be different for home buyers, though.
Look for fewer bidding wars and a less frantic market, says Glenn Kelman, CEO of brokerage Redfin. Its data show bidding wars recently falling to one of two offers handled by Redfin agents, down from three of four at the peak in March.
Homes are taking longer to sell, and more sellers are also reducing prices to win sales, Kelman says. At the same time, the supply of existing homes for sale edged up to 5.1 months from 4.9 months in October, NAR says. That’s still below the six-month supply that Realtors generally consider to be a balanced market for buyers and sellers.
Supply should get closer to that level in 2014, Kelman says.
Donaee and Jeff Reeve hope he’s right. The couple sold their Seattle-area home in just 10 days amid a hot June market. They’ve been renting as they search for a new home with a few acres. Meanwhile, prices have risen. The lack of suitable homes for sale is “discouraging,” says Donaee Reeve, 36, a dental hygienist.
• Housing construction. This part of the housing recovery has been a laggard.
November’s data showed an improvement, with housing starts topping 1 million on an annual basis, the Commerce Department says. That was up almost 30% from a year earlier, but it’s still far below the norm. Starts averaged 1.5 million a year before the mid-2000s housing boom.
Construction won’t return to normal this year, but it will strengthen enough to be the main driver of the housing recovery as home price gains shrink, says investment manager Goldman Sachs Asset Management.
It sees housing starts increasing 20% a year for the next several years as household formation picks up with the strengthening economy.
More home construction means more jobs for construction workers, plumbers, civil engineers and others in the building trades, as well as related industries such as furniture manufacturing, it says.
Construction alone will add 300,000 to 500,000 jobs a year to the nation’s job base for the next three years, GSAM predicts. That’s up from about 100,000 in 2013.
“The construction revival is primarily a matter of when, not if,” says Tom Teles, GSAM head of securitized and government investments.
• Mortgage rates. Sarah and Andrew Katz know home prices are going up, and mortgage interest rates, too. But they’re still convinced it’s a good time to buy a first home. They’ve set their sights on spring.
“We’re banking on interest rates staying under 5%, but they are what they are,” says Sarah, 29, who works in public relations in Manhattan.

We’re banking on interest rates staying under 5%,

— Sarah Katz
The couple better not wait too long, economists warn.
Average rates for a fixed 30-year mortgage will rise to 5.5% by the end of 2014, says Lawrence Yun, NAR chief economist. Rates have already risen about 1 percentage point in the past year as the economy has strengthened. They’ll be pushed up further as the Federal Reserve winds down its $85 billion monthly bond-buying program.
Each percentage point increase in mortgage rates makes homes about 10% more expensive in terms of higher housing payments.
Another factor could weigh on borrowers. Starting in January, lenders must make home loans that meet new federal qualified mortgage standards or face greater liability from borrower lawsuits, should the loans go sour.
At least 5% of mortgages extended in 2013 wouldn’t meet the new standard, Yun says. More than that will likely face additional scrutiny from lenders as they implement all parts of the new rule, says Brian Koss, executive vice president of lender Mortgage Network.
He says the higher rates and tighter rules will likely drive some home buyers out of the market or into lower-priced homes than they could have afforded last year.
“People have gotten spoiled,” Koss says. Higher rates and home prices will test the strength of the housing recovery in 2014, he says.

I read this article at: http://www.usatoday.com/story/money/business/2014/01/01/home-prices-2014-housing-starts/4181021/#!

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