While 2012 was not a great year for the U.S. housing market we did start to see the first signs of recovery, with rising home sales, less inventory and in some cases rising home prices. The Salt Lake City housing market actually returned decent results, certainly better than previous four years. So given this what can we expect in 2013? Well while no one can be sure and guarantee results, there is lots of positive data that would lead us to expect a good year for home owners.
1. Increasing optimism over increasing home values. A fourth quarter survey by HomeGain resulted in 65% of real estate professionals who were asked, saying that they expected home values to increase in 2013, that’s up from 51% in the third quarter and up from 15% in the fourth quarter 2011.
2. Foreclosure rates fell to below pre housing bust levels. The number of foreclosure starts fell to a six year low in December 2012. Data provided by RealtyTrac reported a 28% drop in foreclosure starts year on year, pointing to evidence that the worst of the foreclosure problem is behind us.
3. Number of improving housing markets is increasing. According to the National Association of Home Builders the number of housing markets (U.S. Metro Areas) where home sales, employment and housing values has increased for at least the past six months increased by 76 to a total of 201 in December.
4. Interest rates remain at low levels.
5. Fewer home owners are underwater. The rising home values mean that fewer people are underwater. Figures provided by Zillow show that in the second quarter 2012 the percentage of people underwater fell from 31.4 to 30.9. This figure will continue to fall if home values continue their upward trend.
6. Tight inventory levels. In some areas buyers are becoming frustrated by the lack of homes for sale inventory to choose from. Fewer homes listed means that those homes in popular areas are in high demand, which in turn pushes up home values.
7. Housing starts are climbing. Builder confidence is increasing and with it more new homes are being built. In October 2012 housing starts hit a four year high, and have grown to about 40% of the peak seen back in Jan 2006.
While all this data is very encouraging for the housing market, there are still hurdles ahead, including the fiscal cliff, and debt ceiling.