Why You'll Likely Pay More for Housing in 2014
By Vera Gibbons
While we're just a few weeks into the New Year, you've likely seen headlines showcasing what will cost more this year. You'll have to dig even deeper into your pocket to pay for everything from food to stamps to college education, travel, healthcare and more. In fact, even your biggest expense -- housing -- is getting pricier in 2014:
Zillow Projections: +3% nationally in 2014 -- While 2013′s double-digit gains in home appreciation were certainly economically beneficial (home prices are back at their peak levels in some areas), let's be realistic: they're not sustainable.This year, expect home values to continue to rise but at a more modest, balanced pace of about 3 percent, nationwide.
Zillow Projections: 5% -- As the Fed tapers its bond-buying programs and the economy continues to improve, expect mortgage rates to rise from a current level of about 4.6 percent to 5 percent by the end of 2014, making homes more expensive to finance. For example, the monthly payment on a $200,000 loan will rise by about $160. But there's a silver lining for potential home buyers: it should be easier to get a mortgage this year because higher rates have slashed refinancing activity, prompting some banks to ramp up their purchase lending. Additionally, there will be more inventory on the market, and less competition from investors, as the home-buying process becomes less frenzied.
Zillow Projections: +2.5% nationally in 2014 -- Rents have been rising for some time and there's no end in sight, especially now, when the market is seeing limited supply coupled with high demand. The foreclosure crisis, tight credit conditions and economic uncertainty have forced more Americans to rent. Expect rents to continue to rise throughout 2014, so budget accordingly. Research prices in your area with tools such as Zillow's Rent Index, maintain good credit, and consider bringing in roommates so that you don't become a statistic. According to a recent report by Harvard Joint Center for Housing Studies, half of all U.S. renters are spending more than 30 percent of their income on rent, up from 19 percent a decade earlier.
More from Zillow about homebuying:
How Much Home Can You Afford?
How to Find Home Buying Credits
Key Factors in Securing a Mortgage
More from AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent.
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Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at http://veragibbons.com/.Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.