3 Common Purchases You'll Pay Less for in 2014
NEW YORK ( MainStreet) New year's day is almost upon us, and with it, the certainty that we'll have yet another year of growing expenses. But fear not! We at MainStreet have put together a list of common purchases that you'll likely pay less for in 2014.
1. Consumer electronics
Prices for consumer electronics have "been falling since memory can serve us," said Chris G. Christopher, an economist at research company IHS. The declines are driven by competition among different manufacturers and products that are cheaper to make, in part, because our electronic gadgets are put together in countries where labor is cheap.
The long-running price declines are set to continue next year, with quarterly annualized drops of 4% to 4.5%, Christopher said. That's not as much as during 2012, where in one quarter the annualized decline was 14%, he said, but it still means that the longer you wait to buy a flat-screen TV, the cheaper it'll probably be.
Consumers are likely to get a little relief at the gas pump next year, said AAA spokesman Michael Green.
But only a little.
He's projecting that prices will be "slightly cheaper" in 2014 than they are this year, but not so much "that anyone would notice."
Green said that the increase in industry refining capacity is likely to drive down gasoline prices, which have previously jumped when "a refinery or two have problems." Now that there's more of a cushion, he said, "dramatic spikes" are less likely. Part of that decrease is likely to be offset by a strengthening economy, which increases fuel demand, which, in turn, drives up prices.
A decline in gas costs in 2014 would be the second straight yearly decrease. Prices fell an average of about 10 cents a gallon from their 2012 high to $3.50 this year, Green said.
Still, he warned, lower prices aren't a sure thing. Any number of events, such as a spike in geopolitical tensions, a major hurricane or a dramatically stronger economy, could drive up fuel costs, he said.
"There are more factors than drive up prices dramatically than bring them down dramatically," he said.
3. Real Estate
Home prices heated up in 2013, and according to one measure, they're headed for another tumble.
During the housing bubble that peaked in 2006, home prices, which typically rise at roughly the same rate as rentals, increased 41% more than rental units. By the end of 2011, that gap had closed. Since then, it's been opening back up, with housing prices increasing 7% more than rentals.
Of course, the size of the increase depends on where you live. Some housing markets appear overheated, while others seem to have overcorrected. But, on average, the U.S. looks set for another tumble.