The housing market is always tough to predict or even talk about with accuracy at the national level. But we can spot a few highlights we expect on the horizon in 2013 based on how things have been moving this past quarter.
As mentioned in this column before, I’m really optimistic about housing in 2013 – especially in markets like our own San Francisco Bay Area and Silicon Valley. What I mean by this is not only are we in full swing with the recovery, but also some of our markets will actually be performing at or near full speed, relatively speaking. (Silicon Valley for one is already there.)
Here are the main themes I see taking place in general in 2013:
Demand will continue to improve as the U.S. economy chugs along. Job growth numbers have been improving moderately. Job gains so far this year have averaged 151,000 per month.
The Federal Reserve has indicated it has no plans to raise interest rates through 2013. These record low rates will continue to fuel demand from buyers. In fact, many are predicting mortgage refinancings to temper next year and give way to a much more active purchase market.
Inventory has been the pain point in 2012 for a lot of markets. They struggle to keep up with demand as sellers sit on the fence until values creep back up.
But in 2013, many are expecting this picture to change. Home values have steadily increased in 2012, (Lender Processing Service’s recent home price index showed a 3.6% increase from a year ago), and this has really helped to improve consumer confidence in housing.
The obvious effect will be more sellers braving the market and more inventory for buyers to gobble up.
The foreclosure picture will also improve next year, building off progress this year. Total foreclosure inventory has fallen 9% this year, according to CoreLogic, a good indicator of improving conditions.
Certainly the biggest wild card in any market for 2013 is the fiscal cliff situation. Any time there’s uncertainty in the economy, housing suffers. And our nation still faces serious economic wounds.
Congress will work it out in the end, but something will have to give. And as long as the phrase “fiscal cliff” is in the vernacular and splashed across news headlines, people may be withholding their own financial decisions on big things like their home.
All in all, though, I expect housing to push forward at a faster pace in 2013 than it has in any year since the recession began. I’m optimistic and excited to see this movement once again.
Whereas the last few years have been slow and steady, 2013 will hit the gas. Are you ready?
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.