Zillow Releases Its Predictions for Next Year



Zillow recently released its predictions for next year and they make pretty interesting findings in an article in RISMedia. The company is predicting that home values will increase by 3% in the US next year, but  mortgage rates will rise to 5% by the end of 2014.

It also thinks it will be easier for borrowers to get a mortgage, but in spite of this is predicting that home ownership rates will fall to their lowest level in nearly 20 years. Zillow came to these conclusions through using a number of different factors. When looking at which property markets would be hot next year, these factors included data on population growth and unemployment rates that were combined with the Zillow® Home Value Forecast. It’s intended that the list of hottest property markets be used as an early indication as to which areas will see increasing home values as well as increased demand for housing. At the top of the list is Salt Lake City, followed by Seattle, Austin Texas, San Jose California, Miami, Raleigh North Carolina, Jacksonville Florida, San Diego, Portland Oregon and Boston.

© BRAD - Fotolia.com

© BRAD – Fotolia.com

This year home values increased substantially, rising by about 5% nationwide, while some markets have seen values increased by more than 20%. Real estate experts regard these gains as being beneficial in some ways, but point out that they are not sustainable and are well above the figures that would normally be seen in a healthy and balanced real estate market. In 2014 Zillow are predicting that price increases will slow down quite significantly due to higher mortgage rates and an increase in supply due to fewer borrowers being underwater and more new construction. This will be welcome news for those looking to buy, especially in markets where bidding wars are becoming commonplace.

Zillow have also predicted that mortgage rates will increase to reach 5%, the first time they’ve been this high since early 2010. Even though this will make home loans more expensive to finance, experts point out that even a 5% mortgage rate is still historically low, and thanks to good affordability in many areas it’s anticipated this increase in mortgage rates will not negatively affect the housing market recovery. However it will impact the markets in certain areas where affordability is becoming an issue, particularly in California.

Rising interest rates should make it easier for borrowers to get loans, as fewer will be applying and competition amongst lenders will be fiercer. Recently home ownership rates have been historically high, something that has proved unsustainable. As a result Zillow expects rates to drop below 65%.

About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.