It looks as if 2013 will be a good year for the real estate market as housing prices continue to rise.
Recent reports from CoreLogic show nationwide housing prices increased by 6.3 percent from October 2011 to October 2012, the largest year-over-year increase since June 2006. This data includes the prices of distressed homes, which makes it even more impressive as these homes are usually sold below market value.
In a recent report from Barclays Capital, housing prices are predicted to return to peak levels as early as 2015 after falling more than a third in what Stephen Kim, an analyst with Barclays, referred to as “… a dramatic over-correction during the prior five years …”
According to The Wall Street Journal, J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poor’s, which rates private-issue mortgage bonds, expects a 5% rise in 2013.
CNN Money reports that real estate research firm Fiserv’s chief economist David Stiff predicts that prices should increase 3.4% from the second quarter of 2013 to the second quarter of 2014.
Other factors that may be contributing to the rise in housing prices are inventory of houses for sale are at their lowest level in over 10 years and mortgage interest rates are at an all-time low. According to Calculated Risk, HousingTracker reported that the early December listings, for the 54 metro areas, declined 21.7% from the same period last year. Investors.com reports the average rate of a 30-year loan is under 3.3% and the average rate of a 15-year fixed mortgage is now under 2.7%. These rates are at, or below, the lowest rates on record.
The combination of factors which include housing prices rising, low inventory, and record low interest rates have fueled an increase in buyers looking to take advantage of current conditions. Many investors and home buyers believe that now is the best time to buy a new home. The Mortgage Bankers Association forecasts that home sales will increase and expect new-home loans for purchases to jump 55%, based in dollars, in 2013.
With the rise of housing prices in most of the country and the continued improvement in the real estate market, the overall economy should become stronger and continue to rebound in the coming years.