After a seven-year downturn, 2013 is expected to be the year of a turnaround, as experts forecast home sales and prices to go up. If you’re wondering whether or not you should buy, sell, or stay put, follow our guide for the biggest real estate trends of the year.
Home Prices to Rise
In April 2012, after receiving the first quarterly sales reports of the year, real estate analytics company Trulia reported that home price depreciation had finally slowed and bottomed out. In fact, throughout 2012, prices actually began to rise in a manner not seen for two years.
For 2013, Trulia heralds more good tidings, with prices expected to rise even further than they did in 2012. “Price gains picked up steam in 2012,” said Trulia Chief Economist Jed Kolko. “In 2013, rising prices will encourage more new construction and some homeowners to sell, which will help alleviate the current inventory shortage.”
In Phoenix, Az., one of the hardest hit cities in the housing crash, foreclosures created a bottleneck for home sales. However, experts say that the foreclosure inventory is attenuating. Keller Williams realtor Kelly Cook says foreclosures are quickly moving through the market. “Foreclosures have almost completely fallen off,” Cook says. “They are less than ten percent of the market right now.” Because of the $25 billion federal settlement last year, banks have more incentive to speed up the foreclosure process. As homes auctioned in foreclosure exit the market, local real estate values will rise, and a smaller inventory will fuel greater demand.
Because mortgage rates are at historically low levels and homes are still affordable, buyers are turning out in droves. However, as inventory shores dry up, buyers will struggle to find the perfect home, and they may have to settle for less than they were hoping. “You’re seeing a lot of people having to settle for a house they don’t really want,” Cook says. “That’s because 3 months ago they could have had this, for that, but it’s not available anymore; it’s gone. It’s a thing of the past.”
For the past three years, rental fees at major apartment complexes have risen by $155 a month, and experts agree that rents are expected to soar even higher in 2013. The National Association of Realtors projects rents to increase by more than 4 percent on average. Reis, Inc., another market researcher, predicts that rents will rise by 4 percent or more annually until 2015. The increase in rent will be driven by growing demand for rental units, as boomerang kids decide to move out of their parents’ basements for more independence.