Many brave buyers hope to find a diamond-in-the-rough area that will quickly turn from iffy to spiffy, teeming with new businesses, new residents, new life — and newly increased property values. Here are seven ways to sniff out the next big thing before property values shoot through the roof.
If you’re planning in the spring to buy your first house, you already may be feeling a bit overwhelmed about what can often be a complicated and convoluted process. The good news is that you have plenty of time to learn the myriad steps to buying a home and getting prepared for the endeavor. Many experts say that — even before finding a real estate agent — the first things you should do are to get your finances together and to find a lender who can get you prequalified and advise you on how much house you can buy.
The number of homes purchased with a home loan has been dropping steadily since May, according to RealtyTrac. Instead, cash is king for many reasons. As mortgage rates began creeping up, some home buyers started opting to purchase with all cash. And that trend may continue as new loan requirements become more strict.
However, for those buyers who do need to purchase a home with a loan, expect to see some changes in the loan requirements as the new year rings in. Here are a just a few of the changes that are going into effect in January 2014. Some of these requirements are already in place by lenders.
The top 20 master-planned communities in the country sold 15,338 homes in 2013, which is an 11% increase over 2012. With 9 communities, Texas dominated the list. Florida had 4, Nevada had 3, and California had 2. Colorado and the DC area round out the list.
Only 5 new communities joined the list, and 9 of the top 20 remained the same as last year, which is a reflection of how few new master-planned communities have started recently. Our consultants know this will change, however, as we consulted on dozens of planned new communities in 2013.
Though the housing market continues its halting recovery, thousands of homeowners are still struggling in the aftermath of the worst financial collapse since the Great Depression. Even as the overall foreclosure level has retreated to pre-2006 levels, the average length of cases already in the pipeline has increased.
But that may be changing.
The housing recovery is expected to remain strong in the new year, driven by economic growth and an improving employment picture, economists say.
In fact, job growth likely will be one key to driving housing growth in the new year. An estimated 2 million or more jobs will be created in 2014, predicts Lawrence Yun, National Association of REALTORS(R)’ chief economist.
As employment picks up, greater demand for housing is expected to occur and a surge in homebuilding activity. Celia Chen, housing economist at Moody’s Analytic, predicts a “homebuilding boom” in 2014 that will spark even more jobs — from construction workers to manufacturers — and bring about greater demand for housing overall.
Investments in single-family homes for rental properties will remain an attractive venture in many markets in the new year, says Ingo Winzer, president of Local Market Monitor. Winzer notes that Texas and Oklahoma offer some of the best bets “with their low unemployment rates and ability to profit for years from new shale oil and gas development.”
Local Market Monitor and HomeVestors, an investment company that brands itself “We buy ugly houses,” named the following top 10 housing markets for investing in single-family homes for 2014. All of these markets have posted strong appreciation in the past year but are still underpriced by up to 28 percent.
The recovery in home prices this year is prompting banks to sell off their REO inventory at a brisker pace. Sales of bank-owned homes made up 10 percent of residential sales in November, the third consecutive month for increases in REO sales, RealtyTrac reports.
“Lenders are taking advantage of this environment to unload more of their bank-owned inventory and in-foreclosure inventory at the foreclosure auction,” says RealtyTrac’s Daren Blomquist. “But as the backlog of distressed inventory available dries up in many of the markets with the most efficient foreclosure processes — namely California, Arizona, and Nevada, with Georgia not far behind — overall sales volume is declining and will continue to do so until more nondistressed sellers enter the market.”
Housing foreclosure authorities LoanSafe.org and YouWalkAway.com have created a new website to help people re-enter the housing market after having been through a previous foreclosure. The website is called AfterForeclosure.com and helps those most affected by the housing crisis take charge of their financial future and own their own home again.
Based on a poll of their combined members, LoanSafe.org and AfterForeclosure.com are confident that these potential buyers will make 2014 the year of the “boomerang” buyer.
Changes in lending guidelines and population shifts make these buyers essential to the recovery of the housing market. Jon Maddux, co-founder of AfterForeclosure.com says: “Alienating this large and growing pool of potential buyers does not bode well for the market in an environment where natural housing advancement has been largely disrupted.”
Are you in the market for a house and worrying about whether it will be harder to get a mortgage after Jan. 10, when new federal rules kick in? Don’t fret. For most people the rules won’t make much difference. If the new rules do prevent you from landing a mortgage loan, it could be a sign that you aren’t financially ready for homeownership.
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