Happy New Year to all of you. I hope you had a wonderful, relaxing holiday season!
I thought I’d give you a little recap of the 2012 housing market and what we could expect in 2013. Please remember that housing is a very localized market. While national statistics depict one picture, local statistics may depict another. So, here we go – a bit lengthy but worth the read.
The 5 Biggest Real Estate Stories of 2012
At Keeping Current Matters (KCM) they concentrate on the trends that impact the housing market. Here is what they believe were the biggest stories of 2012.
Housing Was a Tailwind not a Headwind to the National Economy
Over the last several years, many experts claimed that the housing market would not recover until the overall economy recovered. Others, including us here at KCM, believed the exact opposite – the overall economy would not recover until housing recovered. This past year, housing has been one of the only bright spots in an otherwise lethargic economic recovery.
The Fed Remained Committed to Historically Low Mortgage Rates
At the end of 2011, 30-year mortgage rates were at 3.95%. Many, including us, believed that rates had only one way to go – UP! We were wrong. Mr. Bernanke and the Fed continued policies which supported keeping rates at historical lows. This resulted in rates dropping to below 3.4% by year’s end.
Demand Remained Strong throughout the Year
Home sales numbers continued to increase throughout the year suggesting that the country’s belief in homeownership still remains strong. Even the last Existing Homes Sales Report of the year from the National Association of Realtors revealed that home sales were up 5.9% from the previous month and 14.5% from the same time last year.
Inventory Began Shrinking
Housing inventory is at its lowest level (4.8 months) since September of 2005. This represents 22.5% decrease as compared to the same time last year. Shadow Inventory, the inventory of distressed properties coming to market, is also shrinking. This is for two reasons:
1. we are clearing more foreclosures and short sales
2. less families are falling behind in their mortgage payments
Prices First Stabilized and then Increased
Perhaps the biggest story of 2012 is that home values turned the corner and headed upward. By the end of the year, home values were up 10.1% nationally compared to the end of 2011.
Now for the five biggest real estate stories for 2013
The bust of the housing market five years ago created one of the cheapest times to buy. Across many parts of the U.S., even in some of the priciest markets including New York and Honolulu, it has become cheaper to purchase a home than rent, according to Trulia’s Rent vs Buy report. Record-low interest rates on mortgages have also made buying more affordable.
That’s changing, however. In 2012, prices hit bottom. Finally! While that tells us the market is healing, it could also mean buying will be less affordable in 2013.
Asking prices for homes for sale rose 3.8% in November from a year earlier — one of the biggest gains since the housing market crashed in 2007.
While rents nationwide are still rising faster than home prices, the trend has reversed in 14 of Trulia’s 25 biggest rental markets including Denver, Seattle and San Francisco.
Mortgage rates remain at an all time low. 10 year mortgage rates are still available for less than 3 percent.
Home inventory is at a record low. There simply are not enough homes on the market to satisfy the demand. In many areas, there are multiple competing bids for one home within hours of going on the market.
So, there you have it. If you’re a buyer, be prepared! Know what you can spend and have a lender lined up. Be prepared to make an offer immediately when you find the right house, especially if it’s new on the market. Changes are, if you like it, someone else will too.
Sellers – now is a great time to sell if your home is ready to sell and you’re prepared to price within local standards.
Andria Allen 