According to a March 2014 survey, Realtors generally expect prices to increase over the next 12 months at a modest pace, with Realtors generally expecting prices to increase with the median expected price increase to be approximately 4 percent; this is based on the latest Confidence Index Report.
According to the National Association of Realtors, the price growth can be attributed to several factors: the low availability of inventory in comparison with demand, as well as the declining share of distressed sales in the market. While the growth is projected to be modest, some states are expected to experience a rate upwards of 7 percent.
Where are the greatest increases expected?
Six states have the greatest expected prices increases of 5 to 7 percent. These are: California, Oregon, Nevada, Georgia, Florida, and Hawaii.
Several other regions, according to this report, are economically thriving, but still expected to increase by approximately 5 percent; they are: Washington, North Dakota, Texas, Michigan, the metro-D.C. area, and New York. For the rest of the states, a growth of less than 3 percent is expected.
Factors contributing to the overall pricing outlook
As we previously reported, several other factors are contributing to the outlook of pricing. A few of the major problems reported by Realtors were low inventories of available homes, difficulty in obtaining mortgage financing, and difficulty in receiving financing.
The Confidence Report also stated many Realtors reported that even good credit clients were having trouble qualifying for mortgages. There were also reports that the Qualifying Mortgage (QM) regulations and the increase in FHA mortgage insurance premiums have had an adverse effect on buyers.
Additionally, the cost of obtaining flood insurance and the lethargic job growth was also reported to have a negative impact on the market. While only 14 states will see a less than 3 percent increase, 36 will feel a more significant price growth.