Wondering what 2014 will bring for real estate? The outlook for the year is certainly bright, with most experts expecting home prices to rise at a slower and steadier pace. To get a clearer picture of what the national real estate landscape will look like this year, I spoke with Budge Huskey, president and chief executive officer of Coldwell Banker Real Estate LLC.
Jeff Culbertson: Looking at the U.S. economic picture and housing market fundamentals, where you see the housing market heading in 2014?
Budge Huskey: I believe we entered a new housing cycle in 2012, and are now moving into a second stage. The evidence suggests a more normal market is on the horizon as speculative investors are giving way to traditional buyers making decisions based on lifestyle needs. While 2012 and 2013 were years in which we saw buyers return to the market, they were met by a less than robust inventory as distressed assets were quickly absorbed and traditional sellers seemingly postponed entering the market to build more equity and get a better sense of market opportunities. Now, with prices up substantially in most of the country after the over-correction we experienced, it will be interesting to see if more homeowners take their lives off of hold and put their homes on the market in order to move on to the next phase in their lives.
JC: For first-time buyers, is 2014 going to be a good time to buy?
BH: None of us have a crystal ball, but no doubt there is significant pent-up demand in the first-time sector. Although sales increased substantially over the last two years, the rate of ownership in the country didn’t, since so much of the activity was represented by investors. There is little doubt that more houses on the market would favor first-time buyers and allow their impact to go beyond the 30% market impact they currently represent which is low by historical standards. Of course, the greatest driver of sales will be the expansion of household formation, which is already under way, in an environment in which job opportunities and wages are growing at an accelerated pace, as well as sensible lending guidelines which ensure availability of credit.
JC: And what about the luxury sector? Do you think it will continue its momentum from 2013?
BH: Through September 30, Coldwell Banker Previews International® was up 28% in million dollar-plus sales. With the country regaining virtually the entire household wealth lost during the recession and continuing confidence in the economy, the fundamentals are all there for continued expansion in the affluent market. I also think we’ll continue to see the influence of international activity across an even broader spectrum of markets.
JC: If you could sum up the 2014 housing market in one word, what would it be?
BH: Unexciting. And that’s a good thing! Having been in real estate for 30 years, I’ve witnessed several cycles but none like the most recent. The volatility of these last years, whether favorable or unfavorable, will now be replaced by a more normalized environment in which there’s certainty and predictability for both consumers and Realtors. Real estate will be driven, once again, by the fundamentals, and success will come to those who get up each day and find a way to outsmart and outwork the competition and excel beyond the market average.