Is real estate recovery in Park City, Utah sustainable?

A resurgent real estate sector has been one of the main factors behind the recovery that the economy is currently experiencing. Therefore, a lot of focus remains on how this segment continues to perform in 2014 and beyond. Going forward, we may spot some trends that are likely to emerge. First-time home prices should continue to rise, but at a more moderate pace than in 2013. As a result of continued price increases, more homeowners who were unable to enter the market due to valuations extremely low holdings will finally be able to buy and sell real estate. This means that, for the first time in a long time, most mortgages will refer to purchases instead of refinancing.

However, rising mortgage rates will moderate both home sales and earnings on them to more sustainable levels. Lower inventories will facilitate new construction activity and possibly less investor buying. The data so far shows a steady increase in prices in at least the metropolitan areas. But, in the absence of a sustained increase in average income, rapid price increases are not sustainable and we can expect a relaxation of the high profit scenario in 2014. 2013 was an exceptionally good year in this regard with value growth of 10 %. — double the historical average… except 2005-2006 when gains were higher between 11.7 and 13%.

2014 will see a return to sanity in terms of earnings and the propensity to overcorrect due to the recession will have been replaced by a conformity to a more normal 4-5% earnings trajectory. Of course, there will always be outliers that buck this expected trend and underperform or underperform. So the forecast is that while the recovery will continue, it will do so in a much more moderate fashion. It will mainly be shaped by a combination of factors such as inventory, interest rate, credit availability, investments and the general sentiment obtained in the market.

The commercial market has also played a pivotal role in the resurgence of US real estate. Boston, for example, has seen principal rent requests rise by 22%. Economic and demographic developments and changes, more than anything else, will determine the demand for Real Estate. When it comes to commercial real estate, growth is expected to be even for all property types.

If we look too individually at the issues that will determine the direction in which the recovery will take place, some interesting observations will emerge. According to a study by the consulting firm PWC, employment growth, interest rates, income and salary growth, inflation, fiscal policies, the global economic scenario, and federal fiscal deficits are the most critical factors in that order. of importance. When it comes to issues that specifically affect the performance of the real estate sector, construction costs, vacancy rates, land costs, refinancing, and infrastructure development, in that order, are the main influencing factors. .

Perhaps the most important thing about 2014 will be the fact that it will see the return of rationality and normality to the market in a way that has not been seen in the market for a long time. One of the demographically significant trends that will emerge in the next six months is that the sheer number of people wanting to buy a new home is largely driven by the entry of young people into the market. This vital and normally vibrant segment of the population had been largely kept out of the market due to lack of employment or low wages. Many will start renting their own houses, but high rents due to low availability will push many of them to buy their own houses.

Another important thing to consider is the fact that consistent good returns in the stock market have created a market even for high priced homes and luxury real estate. However, it is important to note that since it will take some time before inventory reaches normal levels, 2014 will primarily be a seller’s market, with all that that implies. However, buyers will definitely be able to take advantage of the fact that there will be less pressure from range investors due to the fewer distressed properties they normally covet. Overall, 2014 should be an interesting but stable year.