Last year, I began this annual article by saying that “A simple answer to any questions about the real estate market in 2012 is: If you want to know what the housing market will be like next year, ask the government.”
As I sit down to write and offer my predictions for 2013, the part about “ask the government” seems even more succinct because today is New Year’s Eve and the “fiscal cliff” negotiations remain at an impasse.
Nonetheless, I offer the following 10 predictions for the real estate market in 2013:
1. Home prices will rise, but moderately. We have already seen rising prices in many market areas, but I expect the rises to be slight, in the 2% - 4% range.
2. Builder confidence will move upward. Signs of a rebound are appearing locally and nationally and new home building permits are on the rise.
3. Demand will rise, resulting in higher home prices (See #1). We are already experiencing a shortage of inventory on the North Shore, resulting in slightly higher prices. And as prices rise, so will the demand as buyers fear missed opportunity.
4. Low interest rates will remain in effect, with moderate increases foreseeable, possibly inching up to around 4%.
5. Lending will remain tight. The “defensive” posturing by the banks will remain in effect.
6. The “shadow inventory” (foreclosures and short sales) will shrink…cautiously. The housing market is still fragile and the banks and the government will continue to responsibly address the issue.
7. More first time buyers will enter the market. With the rental market remaining constant, many first time buyers, tired of waiting for the chance to own, will finally jump into the market and take advantage of low interest rates and the belief that home prices have nowhere to go but up.
8. The 2nd home market will re-emerge in 2013. Investors and vacation homebuyers, slightly behind the primary home market, will follow the trend.
9. This may be the year of modification of the home interest deduction. There was talk of it in 2012 and anything seems possible as the government looks for ways to balance the budget. Perhaps a cap on the amount allowed will be considered.
10. The real estate industry will see a rise in the number of agents returning to the business. Agents who dropped out during tough times will begin filtering back in as they perceive a better market. Perhaps now would be a good time to raise the bar for qualifying to obtain a real estate license.
(10-A... Just a note about how one aspect of real estate has changed in the past 10 years:
The days of the sales agent as depicted in Glengarry Glenn Ross have passed. Long gone are the days of the seller knowing far more about a property than the buyer, which prompted the advice “caveat emptor”… buyer beware. Today buyers often know as much, or in some cases even more than the seller due to the enormous and comprehensive amount of information available online, at the buyer’s fingertips.
Equally good advice today, therefore, may be “caveat venditor”… seller beware.
I wish you all a great new year and hope you will remember this...2013 may be the BEST year ever to buy a home, with incredibly low interest rates and property prices just beginning to rise. Don't be one of those that in 2014 or 2015 say: "I remember when I could have bought that home for $X" or "I missed the opportunity of a lifetime in 2013."
Jay Burnham, VP
Coldwell Banker Residential Brokerage