Happy 2013 Everybody!
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Five Real Estate Market Predictions for 2013
1. Rising home prices: The slow pace of new-home construction over the last few years is beginning to push prices up, a pattern that is expected to continue through 2013. The amount of new construction is not at the level necessary to keep up with housing demand, which is another reason for the low amount of housing inventory on the market. Top forecasters for The National Association of Realtors (NAR) project home prices to rise 5% this year.
2. Rising rents as more young professionals enter the market: Top analysts expect that there is a shadow demand in the rental market- meaning that the 3-5 million young people, mostly in their twenties and thirties, who have been living with their parents and waiting for the economy to improve - will begin looking for their own rental properties this year. As they begin to get jobs, they are going to be creating a more competitive demand for condos and single family rental homes. This means, for those looking to find new rentals this year, good luck! You better have all your finances and paperwork ready to go as to place yourself in a more competitive position when looking for rental properties. It should be noted that a recent Zillow analysis found that buying beats renting in 59% of markets after three years or less!
3. Fewer foreclosure bargains: The chance to grab bargain foreclosure properties may be fading this year. Sales of foreclosed homes dropped to 11% of all sales in June of 2012, down from about 28% in March of 2011. This drop is in part because the Federal House Financing Agency (FHFA), the FDIC, and banks have been selling off distressed home loans in bulk to purchasers who agree to work out new terms with borrowers rather than foreclosing on them. Another reason foreclosures have dropped is because the equity position of thousands of borrowers has improved thanks to the rise in home prices this past year, righting many upside-down loans.
4. More short sales: A short sale is a deal in which a lender allows for a home to sell for less than the borrower owes them on the mortgage. This is preferable for the lender because they don't have to go through the expensive and time-consuming foreclosure process, although they may lose some money on the loan. On Nov. 1, the FHFA issued new rules on short sales for Fannie Mae and Freddie Mac. Among other measures, these new rules reduce the documentation that borrowers have to show to prove they have faced financial hardship, and borrowers now aren't necessarily required to pay the difference between what they owe on the mortgage and the final sales price of their house.
5. More first-time home buyers: Consulting firm Deloitte & Touche predicts that growth in the 2013 real estate market will come from the demand in single family homes, likely driven by first-time home buyers. A NAR survey of buyers and sellers from 2011 to 2012 also showed an increase in first time home buyers, and the trend is expected to
continue.
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