The information gathered in the Realtors Confidence Index concerning transactions in November indicates that the market is “still good” although not as strong as before. Local conditions vary. There were reports of a slowdown coming from states such as New York, Iowa, California, Texas, Ohio, Delaware, and Florida, and reports of strong “micro-markets” from states like Wisconsin, Washington, Arkansas, and Indiana
Many REALTORS® reported that the increase in interest rates, the prospect of interest rates further rising in 2014, and higher property mortgage insurance for FHA loans have put off interested homebuyers. Meanwhile, conventional loans which do not require upfront PMI downpayments continue to be difficult to access due to stricter underwriting guidelines.
Lack of inventory, although eased somewhat compared to previous months, continues to be a drag on the recovery. REALTORS® reported the dearth of REOs that could augment supply for homebuyers, given that REOs are instead being converted to rentals by investors. With improving inventory and slowing demand, price appreciation has eased. Properties were also generally on the market longer than was the case a few months ago.
REALTORS® expressed anxiety about the effect of the Qualified Mortgage rules that come into effect in January 2014 and which are expected to further decrease credit availability. In coastal areas such as Florida, North Carolina, South Carolina, New Jersey, New York, Missouri, Washington, Oregon, and Vermont, the steep increase in flood insurance rates was reported as the primary factor depressing demand. Another concern was the impact on consumer finances with the implementation of the Affordable Care Act. The modest job recovery effect of tighter fiscal spending remains as a major issue affecting the recovery.