5 Real Estate Trends to Look For in 2013

Posted By The KCM Crew On December 27, 2012, www.kcmblog.com

 

Predicting trends during volatile economic times in American is no easy task. However, we are going to give it our best shot. We strongly believe these are the five real estate items we should keep an eye on in 2013:

Demand for Housing Will Continue to Surge

The housing market has turned the corner and there is no reason to believe that buyer demand will not maintain momentum throughout 2013. Household formations shot up to boom-time levels in 2012 and are projected to increase at even a faster rate over the next twelve months. A lack of inventory will be more of a challenge to sales increases than will a lack of demand.

Generations X and Y Will Prove They Believe in Homeownership

Contrary to what many have hypothesized over the last few years, young adults (18-35 year olds) are just as committed to homeownership as previous generations. Recent studies have shown:

  • 43% already own a home
  • 72% see homeownership as part of their personal American Dream
  • 93% of those currently renting plan to buy a home

This, along with the increase in household formations mentioned above, makes us believe that 2013 will be the year that many of these young adults will jump into homeownership.

Prices Will Continue to Increase

Pricing of any item is determined by supply and demand. Demand for housing will remain strong throughout 2013. At the same time, the supply of homes ready for is shrinking in many parts of the country. Outside of a few states that still have challenges with large inventories of distressed properties (NY, NJ, CT, IL for example), prices will appreciate nicely.

Even in the areas that are still dealing with high percentages of foreclosures and short sales, prices will not tumble dramatically. The increase in demand will absorb much of this inventory. In these areas, prices will either flatten or perhaps soften to a small degree.

Move-Up Sellers Will Return in Great Numbers

Perhaps what many will find as the biggest surprise of 2013 will be the return of the ‘move-up’ seller. Over the last several years negative equity has prevented many of these sellers from moving up to the house of their dreams. However, with prices recovering, more and more of these sellers will realize that now may be their greatest opportunity to make the move to a lifestyle they always wanted.

With home prices expected to increase and more stringent mortgage qualifications (QR and QRM) scheduled to be announced this year, we believe that the first half of the year will bring many of these sellers/buyers to the market.

The Consumer Will Demand That Their Agent Be an Expert

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as experts. These industry leaders will dominate their markets.

HARP 3.0 | Underwater on Your Home? | What’s New in 2013


2013 is fast approaching – the election is behind us – and the housing market is looking to break out, but, there is still  help needed for our current homeowners moving into 2013. Many homeowners are still underwater and unable to capitalize on low interest rates.  This is why congress, on its published it’s “To-Do List” ,  moved the refinance topic into the #2 slot.  Obama’s “To-Do List” .   Obama realizes there is a lot of work to be done in turning around this market for the majority of Americans. The main issue the president is dealing with are those non- Fannie/Freddie and FHA loans that fall outside the current HARP guidelines.

 

The current administration has put into place some fabulous programs to help current and document providing homeowners refinance their mortgages; HARP and HARP 2 along with the FHA streamline refinance program.     The Harp 2 success numbers are starting to build with the second round of adjustments made to the programs.  HARP 2 numbers .  The reducing/capping  of lender add on fees (Loan Level Price Adjustments or LLPA’s), increasing the Loan-to-value (LTV) limits, including working with PMI companies, and streamlining the LP & DU underwriting systems with Fannie and Freddie, have opened the HARP program to more homeowners.  Despite all of that success, there is still plenty of room for improvement.  The big one is – What to do with all of the Non- Fannie & Freddie loans that currently don’t qualify for the HARP 2 program?   Those are the sub-prime loans of the 2000 – 2007 time frames, the Alt-A loans, and the Jumbo loans (loans above 417k at the time ). There are plenty of willing and able borrowers who can be helped by HARP 3.   If HARP 3 were to be passed, it could fill the gap for those borrowers –  and this program is picking up stream in this administration.  Keep in mind this so called “HARP 3 “ program started during the Obama State of the Union address. HARP 2 and HARP 3 information .

 

Given the track record of how the current administration has worked  with federal mortgage refinance programs, I see a very good chance this bill moving forward in congress.  I think it’s safe to say both sides agree that the key to recovery is jobs and housing.

 

Here is an example of what it could look like . What HARP 3 could look like very soon

 

The million dollar question is – Will it pass, and when will it pass?    Given the amount of attention, the prior success HARP 2 had over the original HARP, and the amount of homeowners still left to save, I predict it happens in Q1 and right after the Debt Ceiling/ Fiscal Cliff shenanigans are over.

 

Special Thanks to Scott Nicholson of PrimeLending for putting this post together and allowing us to share it.

 

Scott Nicholson | Production Manager | Prime Lending | snicholson@primelending.com | 562-225-0769