Home prices have been making steady annual gains in the Washington area, and it looks like that trend will continue. Over 71 percent of area real estate professionals think sales will increase this spring from a year ago, and 82 percent think the average home price will be higher than last year, according to the results of a recent survey from real estate information service MRIS.
The 2014 Spring Real Estate Outlook Survey from MRIS also found that sellers are likely to maintain the upper hand in real estate deals. Forty-five percent of MRIS real estate professionals predict 2014 will continue to be a seller’s market, while 33 percent indicated a buyer’s market for this year. Twenty-two percent of respondents were unsure.
Buyers will have a little more to choose from, but it will depend on their price range. Thirty-seven percent of respondents believe that inventory will increase compared to last year while 32 percent indicated inventory will be about the same as last year. Only 22 percent of real estate professionals predict that inventory will meet the demand they expect for 2014.
“Demand is highest for the more affordable price points, which leads to higher competition among condos and townhomes in our region,” said MRIS Vice President of Product Innovation and Marketing Andrew Strauch. “Baltimore and DC metro’s low supply of attached homes gives seller’s the advantage in our market. Detached homes have a more balanced market and, in some areas, possibly even lean toward the favor of the buyer due to less competition.”
Fifty-eight percent of survey respondents responded that the biggest shortage of supply would be for homes priced below $300,000. Twenty-nine percent said the largest shortage would be homes in the $300,000-500,000 price range.
In early January new mortgage rules issued by the Consumer Financial Protection Bureau went into effect, designed to lower the risk of defaults and foreclosures among borrowers. As a part of the rules, lenders must determine a borrower has the income and assets to afford to make payments during the life of the loan. The majority of real estate agents in the survey believe these new rules will affect home buyers.
Nearly 44 percent of real estate professionals believe the new mortgage rules will be better for the real estate industry and approximately 32 percent are still unsure of the impact on this year’s spring market. Approximately 70 percent responded that the new mortgage rules would reduce the number of people who qualify for a mortgage.
Real estate agents are split on the effect the mortgage rules could have on final sales price with approximately 39 percent who predict it will lead to a lower final sales price and 33 percent who do not think the new mortgage rules will lead to a lower sales price.
The survey drew responses from over 1,300 real estate professionals within MRIS’s geographic footprint, including Washington D.C., Baltimore, Northern Virginia and parts of West Virginia and Pennsylvania, focusing on their predictions for the spring market.