Home owners ready to sell and potential buyers have had
their ears to the ground for the past couple years, keeping track of the real
estate market and what it could mean for their future. It’s been a long hard
road from 2008, but we’re finally seeing that light at the end of the tunnel,
and will continue to in 2013. If you’re ready to list your home or are looking
to purchase one, you may want to consider doing so in the next year after
reviewing these trends set to take off in 2013.
1.
The
Return of Home Value
When the real estate bubble burst a few years ago, many home
owners were shocked to find their home values had plummeted. Selling the homes
that they had spent so much time, money, and effort in to create an investment
just wasn’t feasible in this climate. However, that is quickly changing; real
estate site Trulia is reporting a 3.8% spike in home sale prices in just the
past month alone. It’s looking more and more like 2012 was the year we finally
touched bottom, meaning 2013 will be the year we see a substantial turn around.
Even with prices set to rise in the coming year, it’s still a great time for
buyers to get in there and purchase property, as the record-low interest rates
on home loans are set to continue. Interest rates for December 2012 fell to an
average of 3.68% compared to 4.45% in 2011 and 4.69% in 2010. 2013 is going to
be that sweet spot where home owners begin to see a return on their
investments, while buyers can still snatch up real estate they love for prices
they may not see again in their lifetimes.
2.
New Builds Continue
2012 saw a return of construction and new builds to the real
estate market that had been lacking in years previously. With the ultra-low
prices available to those looking to buy, as well as current owners understandably
unwilling to sell due to home value, the real estate market became thinner than
it had before. The result: buyers turned to home builders to craft their dream
homes. With that boost, builders are now attempting to get back in the game by
upping their constructions, giving potential buyers more options in their
search for the perfect home. Those looking to move into something new this
coming year may want to explore the options of having a home custom built, or
of looking for a new build since the market will continue to be inundated with
them as great options. Building permits were at their highest levels since 2008
this year, which is a great indicator that more builds are coming soon.
3.
First Time Buyers
The recent plunge in the economy has hit certain groups
harder than others; this is especially true for the 25-35 year old age range that
have seen job prospects diminish greatly and their student loan debts grow. The
result has been a giant downturn in first time buyers who would otherwise be
snapping up real estate and establishing families now. This age group suffered
from a 9.2% jobless rate in 2011, compared to 8.7% for other working aged
groups at the same time. However, recently this jobless rate has fallen
substantially to 7.9%, only .2% more than the national average currently. This
means that more and more young adults that have been chomping at the bit to get
into a new home will potentially be able to in the coming year. This is great
news for home sellers anxious to sell and move up to a new home themselves.
When the first time buyers return to the real estate market, the entire system
benefits.
4.
Decline in Delinquencies
It’s been a rough couple of years for many homeowners who
have found themselves underwater on mortgages due to the drop in the economy.
When things began to slow in 2008, many owners became delinquent on mortgage
payments, a clear precursor to foreclosure.
Delinquencies peaked in the final 3 months of 2009, averaging 6.89%; to
compare, delinquencies were only 1.49% in 2006 before the beginning of the
recession. The good news is that the delinquencies have been steadily dropping
since 2012 and are expected to continue their decline well into 2013. Currently
they stand at 5.41%, and are expected to drop another 2% in the coming year.
The silver lining to this is that the vast majority of delinquencies right now
are made up of old debts that are a year or more behind; people are not going
into foreclosure or becoming delinquent anywhere near the rate that they once
were a few years ago. We are finally seeing a stabilization of the housing
market and a possible end to ramped foreclosures.
A Word of Caution
Although there is no denying that the housing market has
been making a recovery in recent months and has the potential to grow even
more, there is one thing that stands between us and a true full recovery. The
culprit? You guessed it: The dreaded fiscal cliff. With much of the United
States’ eyes turned to Washington, it’s no surprise that many people who would
otherwise be taking a chance on buying or selling are waiting to see where the
cards fall. Just the threat of possible economic repercussions has the potential
to upset the recovery underway. Among possible casualties of the fiscal cliff
debates are Mortgage Interest Deductions, The Mortgage Forgiveness Debt Relief
Act of 2007, and the beginning of the Medicare Real Estate Surtax used to fund
the new healthcare system.
Although we’re not quite where we were pre-recession yet,
2012 has given us a lot to be thankful for, and 2013 has the potential to be
even better. No matter the problems or obstacles presented to the housing
market, there will always be great realtors there to help those in need
navigate home sales and purchases, with your benefits in mind. Here’s to a
GREAT 2013!
