Charlie Young, president and CEO of ERA Real Estate, says that several factors in the housing market point to a growing trend of relocation in the new year. More people may be prompted to relocate to areas that offer better costs of living, making 2014 the “year of the big move,” he says. Here are some factors he points to:
Rising mortgage rates: Mortgage rates are expected to nudge higher this year from their historical lows as the Federal Reserve starts tapering its bond-buying stimulus program. “For many would-be homebuyers, an increase of 1 percentage point could make monthly mortgage and interest payments in their current area beyond their reach,” Young says.
Dropping affordability: Incomes are not keeping pace with the rises in home prices. “That means homes are getting more expensive faster than our wages can keep up,” Young says. With higher mortgage rates and higher home prices, affordability is falling in many higher-priced markets, he notes.
Returning equity: As home prices have risen, many home owners have seen equity return and are finally in a position where they can move again. More home owners may look at other states for a lower cost of living, better job opportunities, and better weather, too, Young says.
Rebuilding personal wealth: Many people faced a big hit to personal wealth during the recession and as they rebuild it, they may find that their current area has too high of a cost of living to rebuild comfortably.
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