Top Housing Market Trends for 2013

by 26 Dec 2012
The recovery of the housing market in the United States during 2012 was characterized by the long-awaited bottom in home prices, healthy rental markets in several metropolitan areas, record-low mortgage rates, and a lull in foreclosure activity due to a historical settlement agreement signed by the five largest lenders. Housing analysts are eager to see what 2013 will bring in terms of further recovery, and these are the major trends they are following: Higher Home Prices Mean Increased Demand Some regional housing markets, like Phoenix and Miami, are seeing increases in both rental and purchase prices. This will naturally elevate demand in those regions, particularly if rents keep going up. When renters see that their lease contracts have gotten too expensive, they will once again consider shopping for a home and taking advantage of low mortgage interest rates. Strict Mortgage Lending and Underwriting Standards Will Continue Qualified mortgages will be the new standard of home lending in 2013, and the rulemaking efforts in this regard are thus far pointing to rigid guidelines. This is the new paradigm of home lending; unlike the subprime free-for-all of the early 21st century, not everyone will be able to qualify for a mortgage. Foreclosures and Other Distressed Assets Not Expected to Flood the Market There is still a sizable shadow inventory of foreclosures and Real Estate Owned (REO) properties to consider, but lenders and servicing institutions are not likely to unleash all of them into the market at once. Foreclosure sales could move at a faster pace in hard-hit states like California, Florida and Nevada, but they are not expected to exert too much pressure on the regional housing markets. If banks continue to take a positive stance with regard to short sales in 2013, the shadow inventory will eventually become non-threatening. Home Prices Should Not Retreat A gradual increase of median home prices is part of many economic forecasts for 2013, but there are some concern that if the home prices could actually stagnate if the job market does not improve. Inventories Should be Augmented by New Construction The healthiest regional housing markets are experiencing major reductions in their inventories of homes available for sale. More sellers are expected to get motivated and list their properties for sale now that there is a price recovery underway, but what is more important is that home builders are getting ready to address any inventory shortages with new homes.

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