The future of housing for 2014 looks a lot different – and a lot darker – than it did at the start of the year.

Either fundamentals have changed, or the evidence is getting so overwhelming that neither the most hopeful naiveté or calculating spin can cover it.

That’s not to say there aren’t bright spots, but marking the danger spots on the map is a lot more important than marking X on the buried treasure.

So here are five things to know about housing and where it’s going for the rest of 2014.

1) Luxury Sales Fly as Home Sales for the Rest Crash and Burn

Home sales among the 1%  look like they will beat last year’s numbers, and that’s about the only real bright spot in housing on the horizon, and the only thing looking positive for the rest of 2014.

Sales of the priciest 1% of homes are up 21.1% so far this year, according to Redfin. This follows a gain of 35.7% in 2013. Meanwhile, on the other side of the bridge, home sales in the remaining 99% of the market have fallen 7.6% in 2014.

It’s not that interest rates are usurious by any stretch. This is despite mortgage rates having dropped to their lowest level in more than six months. The 30-year, fixed-rate mortgage averaged 4.14% for the week ended May 22.

BlackRock CEO Laurence Fink said Tuesday that the housing market is “structurally more unsound ” than prior to the financial crisis due to its reliance on the government-sponsored enterprises of Fannie Mae and Freddie Mac.

"There are haves and have-nots, and the haves are the ones out buying," Redfin CEO Glenn Kelman said.

2) Real Estate Investment Highly Uncertain

Concerns still linger over the state of residential investment, which contracted in both the fourth quarter of 2013 and the first quarter of 2014, as well as prices being driven up by investors rather than homeowners, and the growing affordability gap for buyers. The weak labor market means that the recovery is tenuous. Weak job growth and wage stagnation remain challenges for both housing and for the economy in general.

Federal Reserve Bank of Cleveland researchers Edward Knotek II and Saeed Zaman say there are three primary factors behind the recent slowdown in residential investment: the increase in mortgage rates since early 2013; the unusually cold winter; and a modest tightening of lending standards in the residential mortgage market.

The weather reason doesn’t really fly. As CoreLogic’s (CLGX) reported, past severe winters that have affected housing starts negatively were followed by a rebound after temperatures began to rise again. This analysis indicates there should be a rebound again this spring, but it will not be sufficient to counteract the current weakness in the market, which can’t be blamed on the weather.

Knotek and Zaman say the resumption of more normal weather and ongoing improvements in labor markets and the broader economy should allow for a rebound in residential investment. However, the researchers also note that the experiences of the past year highlight the strong interest rate sensitivity of the housing sector.

3) Investor Price Increases Push Housing Out of Reach

Home prices in the United States are just 12.8% off the 2006 peak, according to the comprehensive March home price index report from Black Knight Financial Services.

April home price data from S&P/Case-Shiller released on Tuesday, found slight increases for the month. The 10-city and 20-city composites recorded miniscule rises for March 2014, increasing .8% and .9% month-over-month.

Separately, the Federal Housing Finance Agency House Price Index found that prices continued to trend higher in the first quarter, and increased for the eleventh consecutive quarter, rising 1.3% in the first three months of 2014.

Housing affordability is being skewed by cash investors (increasingly) and institutional buyers (less so than last year) which are still accounting for almost half of all home sales. Until there is affordability, there cannot be a rise in first-time buyer participation. Which brings us to the next point.

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