A new year brings about new hope, new goals, and (most importantly) new housing market predictions. Wondering what’s ahead for the real estate industry? Real estate analysts have been hard at work, and recently announced a flurry of 2013 housing market predictions.
Nationwide recovery will continue, but at a modest pace
Nationwide home prices rose considerably in 2012. Year-end figures reflect a 4.9 percent increase in home prices from December 2011 to December 2012. Home price gains should continue in 2013, but at a cooler pace.
“2013 should be interesting for the housing market, where national gains should continue to see upward growth but likely at a more modest rate,” said Alex Villacorta, director of research and analytics at Clear Capital.
Clear Capital is predicting a 2.1 percent growth in national home prices through the end of 2013. Here’s a look at regional expectations:
Mortgage rules to change
The Consumer Financial Protection Bureau (CFPB) has recently announced new mortgage regulations in January 2013. The new regulations seek to prevent another subprime mortgage crisis, and will standardize parts of the loan origination process.
“The result is likely to be a less varied and more standardized lineup of mortgages,” predicted Alan Zibel and Nick Timiraos in a recent Wall Street Journal article.
Shadow inventory to shrink
The number of delinquent or foreclosed homes that haven’t yet hit the market (aka “shadow inventory”) appears to be declining.
Shadow inventory has continued to shrink over 2012, according to real estate analytics firm CoreLogic. The number of shadow inventory homes numbered 2.3 million in October 2012, which reflects a 12.3 percent decline from the October 2011 figure.
“We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold,” said CoreLogic CEO Anand Nallathambi.
Mortgage rates to increase slightly
Fiscal cliff fears caused mortgage rates to temporarily spike in early 2013, but a quick agreement brought rates back down to earth. As of January 8, the average rate for conforming 30-year fixed-rate mortgages was 3.55 percent, according to HSH.com’s Weekly Mortgage Rates Radar. The all-time low was 3.31 percent, set November 21, 2012.
How will mortgage rates end the year? The Mortgage Bankers Association expects 30-year fixed rates to rise moderately to 4.4 percent by the fourth quarter of 2013.
Rental increases will mirror 2012
An appreciating market tends to lure renters away from their leases. While 2012 was a strong year for landlords, rental increases have eased as the housing market strengthens.
“Property owners and operators generally aren’t pushing rents quite as hard as they were a year or so ago,” said Greg Willett, VP of research at MPF Research.
A study conducted by MPF Research found that rents continued to rise in 2012, but at a slower pace than the previous year. Rents for new leases rose 4.8 percent in 2011, and only 3 percent in 2012.
MPF expects 2013 to mirror 2012 in terms of rental increases, and predicts an average rental hike of 3 percent by the year’s end.
2013 = Year of Moderation
Thankfully for agents with high blood pressure, 2013 looks to be a relatively tranquil year. Look for modest price gains, slight mortgage rate increases, and slight rental increases to occur by the year’s end.
After six years of drastic highs and lows, that moderate progress may be just what the doctor ordered.