Real Estate Market Trends Despite the rise in mortgage rates, market analysts expect the federal budget and the improving economy to lead to price gains in the Maryland real estate market. Price gains are likely to be witnessed across the board, in terms of buying homes as well as rents. On the whole, 2014 is likely to be a good year for the housing market, with the rising home values pulling in more sellers, while offering buyers a wider choice.

Moody’s predicts an 8% increase in average home prices across the Baltimore region for 2014, as compared to the 5.6% increase seen in 2013. In an interview with The Baltimore Sun earlier this year, Moody Analytics’ housing economist, Celia Chen, said that while federal budget cuts adversely affected the housing market in the region through 2013, this year would see an easing of sequestration towards the latter half, which should benefit the market. “We’re expecting sturdy growth in house prices in the coming year that will be supported by a stronger economy and still reasonably priced housing,” Chen said.

The good news, however, is that the rise in home prices through 2014 is likely to be less steep than that seen in 2013. On the whole, most market observers predict growth of about 5%, as compared to the 10% rise seen last year.

Real Estate Market Trends 2014Historically low mortgage rates and the still-affordable prices of homes drove buyers in 2013, although the choice for these buyers was limited. Sellers benefited from low inventories with investors engaging in bidding wars that often took the prices above the asking rate. Despite the surge in prices seen across the country in 2013, homes are still affordable on an average, with prices about 31.5% lower than the peak seen in 2006. At the same time, the historically low mortgage rates meant that people were spending a much lower percentage of their monthly family income on mortgage payments than they did in 2006.

As a result, the number of new mortgage defaulters in Maryland has been dropping. The percentage of loans in foreclosure in Maryland was the ninth highest in the United States in the summer of 2013, according to data released by the Mortgage Bankers Association. Many of these homes are likely to end up as being bank-owned this year and therefore on the market.

While distressed properties are likely to continue to add to housing supply in 2014, fewer home owners will lose their homes as the economy strengthens and lenders are more likely to agree to short sales with the home prices rising. Further housing supply

On a final note, the National Association of Home Builders predicts that a normal pace for housing starts is unlikely to resume until late 2015.