Real Estate Forecast for 2013

13
31

Residential real estate collapsed in 2007 and became a buyer’s market. But last year the real estate market began to turn around. According to the New York Times, “Last year will probably go down as the year that residential real estate prices hit bottom and began to rise after the collapse that began in 2007.”

According to most experts and economists, real estate is still a buyer’s market but is in recovery mode. Optimism is finally returning to the housing market, but we want to hear from our network on their own predictions for the real estate market in 2013.

Why We’re Asking:

The real estate market reflects how the economy is doing. When more people are buying homes, it means jobs and families are growing. In turn, it helps promote more jobs related to home services and home improvement. The impact of the housing market on our economy is incredibly significant so we want to know what is projected for the year ahead of us. Even more, we wonder how real estate law is affected by the state of the market. For example, if a home is repossessed during the recession, is its valued based on the recession or prior to the recession at a higher value?

We’re looking to our network for their projections for 2013:

What is your real estate forecast for 2013?

Will 2013 be a buyer’s market? A good year to sell?

Which parts of the country will see the most recovery/growth?

Does the current state of the economy affect the home’s value moving forward? Are there any laws regulating original value of home versus the recession value, when a home is repossessed?

We look forward to learning about real estate predictions for 2013. Check back next week to see what they have to say!

Post your answers in the comment field below!

13 COMMENTS

  1. What is your real estate forecast for 2013: I believe it’s becoming increasingly evident that the market will continue to improve in this year. After a slow and painful recovery for many of us, home prices are expected to increase this year by 3% to 3.5%. Higher prices for sellers creates incentive for listing, but the still large number of homes on the market gives buyers options. In a lot of ways, it’s a win-win situation right now.

    Will 2013 be a buyer’s market? A good year to sell?: As I mentioned before, I actually think the answer is yes to both of those questions. Inventory is decreasing and prices are rising, which is good for sellers. But buyers aren’t as concerned about a poor economy as they’ve been in recent years, and, compared to pre-bust prices, homes are still a good deal in many areas.

    • In the US, budget showdowns, the next scheduled in May 2013, continue to rattle the economy. Yet consumers are confident that Congress will not allow the country to fall over the fiscal cliff. On the economy front, investors were caught off guard when US gross domestic product (GDP) fell at a 0.1% annual rate for the fourth quarter of 2012. Economists explained the fall by referring to the deep cuts in defense expenditure. The number of people filing their first claim for unemployment benefits also grew by 38,000, to 368,000, exceeding expectations. (US Bureau of Labour Statistics) For January 2013, the unemployment rate crept up to 7.9%, as more people returned to the workforce and partly as a result of the recent inclement weather.

      Unsurprisingly as a result of the US economy’s pause in economic growth the US Federal Reserve (Fed) has agreed to continue to purchase mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. Taken together, it is hoped these actions will maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. (Federal Reserve Press. Release). The highly accommodative monetary stance will be appropriate at least as long as the unemployment rate remains above 6.5% and inflation does not rise above the 2% benchmark.

      Despite all the political and global economic uncertainty, corporates have deleveraged and improved the health of their balance sheets. A housing recovery is now well on the way with the S&P/Case Shiller composite index rising 5.5% year over year. Oil and shale gas production has surged, thanks to fracking, with daily crude output averaged at 6.4 million barrels a day in 2012. Output is now at a 15-year high, according to the American Petroleum Institute. Manufacturing has experienced somewhat of a renaissance thanks to low unit labour costs, cheap energy and the low $US. The Institute for Supply Management’s manufacturing index climbed to 53.1 in January 2013 from December’s 50.2. Readings above 50 signal expansion.

      Trident Real Estate Capital believes that the private sector recovery and an inevitable meeting of the minds by the Democrats and Republicans combined with the resolution of the foreclosure process and private capital interest will result in an accelerated recovery in the housing sector. The commercial real estate (CRE) sector will continue to be attractive primarily because of large spreads above fixed-income investments and the greater stability over stocks that CRE commands. The expansion of the Panama Canal and the ability of Post-Panamax vessels to pass the canal will mean industrial property will see strong investor interest especially around East Coast ports.

  2. It’s going to be a tough year for buyers. Yes, buyers. For the first
    time in years, there’s not enough inventory in North Texas to satisfy
    the demand. Home builders significantly slowed construction in recent
    years and are just now ramping back up. In terms of pre-existing, good
    properties go quickly. By “good” I mean in relatively good shape.

    We’ve been working with one couple to find them a home in a specific
    part of the area where they could get a USDA loan. The loan program in
    that community ends in March, and that’s the area they have to live in
    for various reasons.

    This scenario happened to that couple on at least three occasions in
    the last 10 days: A property that met their criteria was listed in
    the morning. By the time my clients could get off work to see the
    property, it already would have multiple offers. just this morning, a
    property matching their search criteria came on the market. They made
    a full-price offer sight unseen.

  3. What is your real estate forecast for 2013?

    Money (loans) for most buyers will continue to be the fly in the ointment. Although affordability is high across the country, most potential homeowners will continue to be pushed out of the market as they try and compete for low inventories of homes for sale and a dearth of cash buyers. Something will have to give. Either lending requirements loosen or cash investors will start to push more and more homes intended as rentals back into the for sale marketplace. Negative equity will continue to hamper a real recovery in housing. Until and/or unless we address the large number of underwater borrowers, we will have “disfunctioning” markets.

    Will 2013 be a buyer’s market? A good year to sell?

    It is currently a seller’s market in most of the highly desirable areas of Southern California. The continued issue however is that many homeowners still cannot sell easily. This is either because they are upside down on their home or because they have missed payments and are in some state of default. Selling for most of these homeowners requires bank cooperation, such as a short sale. The market could turn into a buyer’s market by the end of summer if the economic fundamentals don’t improve

    Which parts of the country will see the most recovery/growth?

    Highly sought after markets like Southern California and Manhattan, New York. Growing cities with positive job prospects like San Antonio and Austin Texas.

    Does the current state of the economy affect the home’s value moving forward?

    Absolutely yes. We need positive consumer confidence, jobs, and economic growth to drive a demand for housing. A shrinking economy and negative indicators keep buyers away from new home purchases

    Are there any laws regulating original value of home versus the recession value, when a home is repossessed?

    I’m not 100% sure I understand your question. However, the Debt Relief Act of 2007 and the extension of it’s key provisions from last year have impacted an underwater homeowners ability to sell. In particular the forgiveness of “phantom income”. Without this key provision, many short sellers or those who lose a home to foreclosure would also have an income tax burden resulting from the debt forgiven in the sale of their home.

  4. It is my forecast that 2013 will see a significant increase based on some of the trends identified at the close of 2012. I have been in several markets of a home search for clients last year as follows:
    New construction- is on the rise here in Florida a market that was probably hit the hardest in the recession and foreclosures. I witnessed in several cases where I was with my client and had to wait in line to see a few model homes. In one development there were 12 people viewing one home at the same time. The homes ranged from 225-259k this was a great site to see for a allegedly down economy.

    Short-sales- I have input offers for homes and within the hour I will receive an offer from an investor to purchase (sight unseen). The investor would not be buying this many homes this fast if they were not going to re-sale to an owner occupied borrower, first time home buyer very soon. Which means this home will be sold once more and help to increase the value of the home and the community.

    Bank owned- I have yet to submit an offer on a bank owned property and there isn’t multiple offers regardless of the price of the home. This is great news because in many cases the lender has reserved an initial period for owner occupied non investor borrowers.
    Each of these are what dominates the markets today, it has great indicators of sales increase for the upcoming years.

    Will 2013 be a buyer’s market? A good year to sell?
    My forecast for 2013 concerning traditional sales verses a short-sale will be somewhat bad news.
    There will be more short-sales place on the market in many neighborhoods and the persons attempting to sell the home at their existing amount owed with a little equity may be somewhat impossible. However, some of the luxury homes required significant down payments, the borrowers may have also made principal reduction payments overtime resulting in the possibility to sell in today’s market.

    I look forward to the next 5 years of sales.

  5. As the managing editor of Agent Publishing, a real estate magazine with a print publication in Chicago and online publications in Chicago, Houston and Miami, I am confident I can give you a few predictions for 2013. For instance, the real estate forecast varies from city to city – Houston has had a great year and is one of the best markets, currently, and looking at how home sales are trending, that will stay stable into this year. Miami and Chicago, however, are a bit different – Chicago is incrementally and steadily increasing in terms of home prices and sales, while the amount of foreclosures in Miami has increased, but home prices have still increased, making it tougher for buyers to buy quality housing, something important if buyers aren’t looking for foreclosures or short sales.

    2013 will most likely not be a buyer’s market for many cities. There isn’t a lot of inventory on the market right now, making it great for sellers; buyers are now needing to get competitive to buy quality housing. Multiple offers and bidding wars are increasing, and I know several agents who haven’t sold anything in a few months only because their clients keep getting outbid.

  6. We are actually experiencing a huge seller’s market in almost every area of the greater LA Area (Santa Monica, Mar Vista, Venice, West Los Angeles, Brentwood, Cheviot Hills…) due to low inventory and really low interest rates. I think that sellers who are holding off their properties are going to wait too long to list their homes, will price them based on their expectations (instead of market comps) and that come August, we’ll have a glut on the market so that buyers will have an easier time of it.
    If interest rates go up, we’ll have a whole new “weather system” to deal with.

  7. Real Estate Forecast for 2013
    This is a pretty easy question right now. The market will be robust in
    2013, pretty much nationwide. The factors driving the market include:
    * Low interest rates
    * Improving economy
    * Reduction in foreclosures
    * Low inventory levels
    * Lack of construction in recent years, and still surprisingly slow
    * Pent up demand from years of purchase deferral
    * Dramatic change in buyer psychology
    By some measures, prices are up 10% nationwide.
    Locally in the Dallas area, prices are up 5.5-8.0%, depending on your data
    source. This is not a just a rebound from an over-correction, because
    prices in this area only dropped 12% from the peak. The local market is
    being driven by a robust economy, population growth, and low inventory.
    Double digit year-over-year price increases are possible, which would be
    amazing in a market this historically stable.
    Buyer or Seller’s Market?
    Unquestionably a seller’s market. Buyers are in trouble ­ both retail and
    wholesale. The real estate investor market has too many participants, and
    is sized for a much higher level of distressed properties. In North Texas,
    foreclosures are down over 50% from just a year ago, and
    wholesale/distressed properties are being bid up aggressively. Retail
    buyers don’t have a lot of inventory to choose from, and lenders are still
    making it difficult to get a loan. If lenders ever loosened up, prices
    would go crazy. I don’t see that happening however ­ no need right now.
    Hottest Parts of the Country
    In general, the places that fell the hardest are rising the most. Arizona,
    California, and Florida are rising rapidly, as is Detroit. Traditionally
    strong markets such as San Francisco and Seattle are again doing well. Big
    northern and northeastern cities are lagging ­ New York, Chicago, Boston, as
    well as states like Pennsylvania. Texas cities are middle of the pack ­
    they tend to be leaders during declines, and laggards when prices spike.
    Impact of the Economy
    Definitely has an impact, and will be more important over the long haul.
    Right now, prices are being driven more by a rebound effect from a historic
    fall, and supply/demand imbalances. For the housing recovery to be
    sustained, the economy will have to be reasonably strong.
    Laws around Recession, with respect to foreclosures
    These laws tend to be state-specific. They weren’t a big factor on the
    market during the explosion in foreclosures, and will be less so in an
    improving market with reduced foreclosures.

  8. All real estate is local so what’s going on in Boston is different from
    Atlanta, Miami Dallas and or San Francisco so there is no one good answer
    for 2013. Across all markets prices seem to have bottomed. Some are up
    because of low supply, there has been little to no new construction for the past 5-6 years. In some markets speculative investor buyers have cleared the lower distressed inventory so average sales price are higher. This is deceptive. Where the market went off the rails was when real estate values departed from historic relative norms. Value is a function of supply, demand, and income. Where jobs and income have not improved, expectations that price improvements will continue are unrealistic. Similarly to the stock tech bubble when P/E ratios skyrocketed values were unsupportable. That said, in many markets values plummeted as there was tremendous over supply, very high unemployment coupled with lowered income for those employed and tight credit. The market grossly overshot the bottom. In those markets where today’s prices are still far below the depreciated replacement costs, the values on those homes will have to increase to replacement costs or the other homes will have to fall in value. While the cost of a home may in the most highly distressed areas still be at 50-60% of replacement cost; roofs, garage doors, HVAC units and hot water tanks are still the same price they were in 2006. Price will substantially recover. There has not been a real estate down turn that was not followed by prices exceeding their former peaks. Peoples memory of the downturns are short,time after time exuberance follows depression. We have a bi-polar investment climate.

    Who would have thought the Dow would more than double in under 5 years after the spectacular fall in 2009, almost no one. Expect the overall residential real estate to do the same over the next 5 years and better selected assets to beat the market. Who believes that today, almost no one.

  9. What is your real estate forecast for 2013? Approaching the end of the 1st quarter of 2013, we have continued to see a lack of inventory, which will drive sales prices up. We must remember that builders, overall, have not been building for the past 5 or 6 years, which automatically depletes inventory and is a natural trend for resales to have multiple offers, thus driving their prices up. I think we could see sales prices increase during 2013 anywhere from 5-10%.

    Will 2013 be a buyer’s market? When a market begins to turn, it generally takes 12-18 months for either Buyers or Sellers to realize that the market has gone in the opposite direction from what they have been experiencing. We have been in a Buyer’s market for the past 5 or 6 years, and my belief is that it’s over. The interest rates have remained at an all time low, the prices started to slide in 2006, and continued downward up until 6 or 8 months ago, at which time, we started to see a stabilization in many market areas. In my opinion, if people wait too much longer, whether they are a Buyer or a Seller, they will not have the opportunity to move up to the next price level and be able to take advantage of the “Market Low” pricing. If a seller has lost equity, they would make it up on the buy side.

    A good year to sell? I do believe, over the next 12 months, we will move into a definite Seller’s market, but that will also prevent the “Seller” from taking advantage of moving up to the next buying level.

    Which parts of the country will see the most recovery/growth? The Mid-West started its downturn long before some of the other areas in the country. My belief is the growth recovery will be in New England, Nevada, Florida, California & the Mid-West.

    Does the current state of the economy affect the home’s value
    moving forward? Absolutely. All external factors that we generally have no control over, whether they be political, unemployment or communities affected by devastating weather conditions, will always affect a home’s value. After 911, we saw the home buying and selling process come to a complete halt for several months. If true unemployment figures are shared with the public, that will be a major indicator as to whether or not we will have a strong recovery year.

    Are there any laws regulating original value of
    home versus the recession value, when a home is repossessed? Home values have been severely affected by the foreclosure market. To my knowledge, there are no laws that regulate original value of a home vs. the recession value. Value is created by what a Buyer is willing to pay, and what a Seller is willing to sell for. We currently still have what we call” shadow Inventory” that has not come to the foreclosure market, and those floodgates will have to open at some point. When that happens, that could dramatically affect a healthy comeback for 2013.

  10. The numbers are in and 2013 is already shaping up to be the best year since the recession. Due to a variety of factors converging this year, the market is now shifting from the buyer’s domain to the seller’s. The combination of low interest rates, low inventory, an improving economy and a wealth of buyers who have waited out the recession has already created a solid revival in many markets, such as Austin, San Diego and Seattle. 2013 will be the best year we’ve seen since 2006-07.

  11. In the US, budget showdowns, the next scheduled in May 2013, continue to rattle the economy. Yet consumers are confident that Congress will not allow the country to fall over the fiscal cliff. On the economy front, investors were caught off guard when US gross domestic product (GDP) fell at a 0.1% annual rate for the fourth quarter of 2012. Economists explained the fall by referring to the deep cuts in defense expenditure. The number of people filing their first claim for unemployment benefits also grew by 38,000, to 368,000, exceeding expectations. (US Bureau of Labor Statistics) For January 2013, the unemployment rate crept up to 7.9%, as more people returned to the workforce and partly as a result of the recent inclement weather.

    Unsurprisingly as a result of the US economy’s pause in economic growth the US Federal Reserve (Fed) has agreed to continue to purchase mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. Taken together, it is hoped these actions will maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodating. (Federal Reserve Press. Release). The highly accommodating monetary stance will be appropriate at least as long as the unemployment rate remains above 6.5% and inflation does not rise above the 2% benchmark.

    Despite all the political and global economic uncertainty, corporates have de-leveraged and improved the health of their balance sheets. A housing recovery is now well on the way with the S&P/Case Shiller composite index rising 5.5% year over year. Oil and shale gas production has surged, thanks to fracking, with daily crude output averaged at 6.4 million barrels a day in 2012. Output is now at a 15-year high, according to the American Petroleum Institute. Manufacturing has experienced somewhat of a renaissance thanks to low unit labor costs, cheap energy and the low $US. The Institute for Supply Management’s manufacturing index climbed to 53.1 in January 2013 from December’s 50.2. Readings above 50 signal expansion.

    Trident Real Estate believes that the private sector recovery and an inevitable meeting of the minds by the Democrats and Republicans combined with the resolution of the foreclosure process and private capital interest will result in an accelerated recovery in the housing sector. The commercial real estate (CRE) sector will continue to be attractive primarily because of large spreads above fixed-income investments and the greater stability over stocks that CRE commands. The expansion of the Panama Canal and the ability of Post-Panamax vessels to pass the canal will mean industrial property will see strong investor interest especially around East Coast ports.

  12. What is your real estate forecast for 2013?

    We can comfortably state that the home market has gone up this year and we do expect it to maintain the same pace. With that said, however, it should be clear that the pace is very, very slow. In fact it is often less than 1% of the previous years numbers, and very far below the 2009 numbers.

    Will 2013 be a buyer’s market? A good year to sell?

    Predictable Factors that will impact the pace will be inventory of homes for sale, foreclosure and short sales on the market. Until the foreclosure and short sale inventory is reduced, home prices will not increase. If demand and prices don’t increase, then it is very difficult for home owners who are under water, to sell for a reasonable price.

    > Which parts of the country will see the most recovery/growth?
    >
    > It’s always hard to pinpoint these questions, but many times areas that fell hardest climb a bit faster. The largest areas of home construction pre-2009 were areas like Arizona, Florida, Las Vegas. As the Baby Boomers continue to retire in droves, moving to warmer and less expensive areas created a high demand. After the market crashed, these areas were devastated by huge amount of inventory available. The opportunity for growth exists where the losses were lowest. Areas of strong business or industry also have great opportunity. The Tri- State area for example did not fall as hard or fast as the previously mentioned areas. So the uptick may not be as large in the bigger tier cities, these areas can be compared to Blue chip stocks. Strong, steady and as reliable as feasibly possible.
    >
    > Does the current state of the economy affect the home’s value
    > moving forward? Are there any laws regulating original value of
    > home versus the recession value, when a home is repossessed?
    > There are no real laws around value. Value is a by product of supply and demand. Simple economics. The economy affects the housing market by allowing for growth and upward mobility. Real estate as an asset is the last to buy and last to sell. Most people do not buy a home unless they can afford to put the requirement money down and afford carrying it. Conversely, people do not dump real estate unless they are in a very bad way. Inventory affects the market. The tighter the inventory the less for a buyer to choose from. Also, the more difficult it is to borrow money, or pay for taxes, insurance and a mortgage, the less demand to buy real estate. The current economic is odd. It offers amazing rates to borrow money, but it’s very restrictive as to who can qualify. On the flip side, the inventory for a buyer is low because of people not willing to take a loss on their own, unless they absolutely must. The good news is that as the stick market continues to move upward, confidence grows, discretionary income increases and then! Real estate moves.

Comments are closed.