Here’s Why Real Estate Will Have an Excellent Spring | Mt Kisco NY Real Estate

There’s no getting around it: It’s been a brutal winter in many parts of the country. And much of the negative economic data we’ve seen recently has been driven by the unusually harsh weather.

This is especially true in housing, where new mortgages have declined and housing starts have fallen considerably.  However, I think there may be a very positive spring on the horizon for real estate as built-up demand and favorable buying conditions create a “perfect storm” (pun intended) of real estate activity.

Housing starts At first glance, the recent housing-start data looks atrocious, dropping by 16% from December to January. The rate of housing starts is lower than a year ago, even though the market improved throughout 2013.

Even the number of new housing permits — a good indicator of the building activity to come over the next couple of months — dropped. January’s rate of housing permits was 5.4% lower than it was in December, which indicates that February’s housing starts data might be even worse.

This makes sense, and I wouldn’t be surprised if the actual number comes in much worse than even the lowest estimates. February’s weather has been terrible, and of the permits that were initiated, weather delays may have prevented the actual construction from commencing.

On the other hand, once the weather gets nicer, homebuilders may have a backlog of new homes to build that they haven’t been able to start. Along with that, they could see more buyers coming into the market simply because better weather makes it more enjoyable to go out and shop for a house. After all, who wants to shop for a house in a foot of snow?

Mortgages are lower despite decent interest rates Although interest rates on mortgages are higher than they were last year, they definitely seem to have stabilized as a result of the Federal Reserve’s long-awaited taper at the end of 2013.

However, despite the stabilizing rates, mortgage applications fell by 8.5% in a recent report. However, a good chunk of the drop in mortgage applications is due to the 11% drop in refinancing applications, which is included in the total number. This makes sense since as rates rise, there’s progressively less of a financial case for refinancing.