Five Predictions for Housing in 2013Dec 31 2012
We watched for more home sales and rising prices in 2012. Here are the housing predictions for next year.
Buying gets less affordable
The bust of the housing market 5 years ago created one of the cheapest times to buy, making it cheaper to purchase a home rather than rent. However that’s changing in 2013. In 2012, prices finally hit bottom, which means buying will be less affordable in 2013.
Watch for rising jobs, not rising prices
Most of us watched home prices to gauge the health of the housing market in 2012. But just because prices are rising doesn’t mean the industry is doing better. Prices have risen, partly because they fell so much and also because many homes are still undergoing the foreclosure process.
Delinquencies fall (very slowly)
The troubled housing market was marked by record foreclosures, which is why economists closely watch the rate at which homeowners are late on their payments. Nationwide, the delinquency rate on mortgages peaked during the last 3 months of 2009. As of last quarter, the delinquency rate dropped to 5.41% and for 2013, it’s expected to continue dropping – albeit, slowly to around 2%.
Record-low interest rates
Cheap money has certainly helped the housing market recover and over the past few years, average interest rates on 30-year-fixed mortgages fell to new lows. While rates can’t stay low forever, the Federal Reserve is trying to prevent rates from rising anytime soon, keeping them low into 2015.
The housing market’s rebound was hard to miss this year, but not everyone rode the wave to better days. Missing were first-time homebuyers, many of whom were either jobless or couldn’t get a home loan. Those who tend to be first-time buyers, 25 to 34-year olds, suffered far worse joblessness than most other adults in the years following the recession. Recently, unemployment among young workers has fallen and if the trend continues, it may help them become first-time homebuyers in 2013.