Four housing trends for 2013 that are affecting the Real Estate Market
We’re already a month into the New Year, but one thing about the housing market is certain: all signs point to continued growth. Depending on how observed trends play out, 2013 could end up being a great year for the market. At the least it will be the best year we’ve seen in a long time.
Since the housing market crash in 2008, sales have been low and property values hit rock bottom, but last year saw considerable growth and a wave of positive trends. This year, experts are predicting four main trends that will push the national market further down its path to recovery.
House prices will go up
Not only did property values go down during the housing crisis, but the number of new homes being built went down. Take a look at the number of building permits issued between 2007 and 2011:
• 1,398,415 issued in 2007
• 905,359 issued in 2008
• 582,963 issued in 2009
• 604,610 issued in 2010
• 624,061 issued in 2011
This directly mirrors the housing market activity in this period. In 2007, the national market was booming. In 2008, it crashed and continued to do so for the next two years. Home sales were dragging as foreclosures and short sales were forcing homebuyers to give up their homes and essentially get out of the market.
Right now, three things are going on. First, buyers are returning to the market and are hungry to buy homes. Second, the population is increasing rapidly, and the number of first-time homebuyers is higher now than ever before. Third, although progress in new home construction is being made, the decline of new construction homes in recent years has caused the number of available homes to be at an all-time low. For this reason, it is predicted that home prices will rise substantially, and more sales will occur as homeowners become encouraged to sell at these higher prices. And with buyers returning to the market, this is a great way to keep the market growing.
Rent prices will also go up
For the same reasons house prices are going up, rent prices are also going up. However, prices for rent are going up in part because house prices are going up – people who cannot afford to buy a house are renting, and the rise in the number of renters is causing that price to inch upward. 2012 saw the rental market booming as college graduates and young professionals made up a large number of the rentals. Their growing influence in the market could be attributed to the growing number of jobs becoming available that many of these graduates and professionals are attaining. As the economy continues to improve, so will the housing market, and the demand for apartments and rental properties will cause rent prices to go up.
Higher interest rates will cause more activity now than later
Banks and mortgage lenders are agreeing that interest rates will inevitably rise in 2013. With the historic lows witnessed in 2012, this shouldn’t be a shock to anybody – at least no one working in the housing and lending business. Because of this, the number of sales in 2013 is expected to be largely front-loaded. Price-savvy and financially-aware buyers will complete transactions now while rates are still low.
Despite rates having already increased since the Federal Reserve’s meeting in December, they still remain low. Buyers are recommended to invest now before the 30-year fixed mortgage rates increase to 4.4 percent within the next year, as estimated by Mortgage Bankers Association. With the majority of home sales supposedly happening at the beginning of the year, ongoing activity in the market is definitely a good thing – but may prove not so good in the latter half of the year. Only time will tell.
An optimal use of evolving technology
Technology is constantly evolving, and its widespread embrace by businesses across the world has created the need to innovate and find new ways to present information to the public. In the real estate market, it’s no different. Nowadays, people begin their search for a new home online. While good SEO (search engine optimization) and professional websites are attractive to buyers who use search engines, Google is not the only way to bring in the eyeballs. In fact, YouTube is currently the second largest search engine on the web, ranking higher than Yahoo, Bing, and other prominent search engines.
Because of this, one of the biggest real estate trends in 2013 will be the use of videos to attract potential buyers. Pictures are great to add to listings, but a video can really showcase the house and surrounding neighborhood to the fullest capacity. Buyers want to get a good feel for the home before purchasing it or even going out to see it, and a walkthrough video, as well as a video of some of the best community attractions, can increase immediately increase interest.
Overall, these predictions seem pretty spot on with the latest snapshot of the housing market. As the year goes on, more trends may pop up, depending on how well the market is doing. At the moment, however, things are looking good.
Do you have any other expectations for the real estate market in Arizona or in your area? Comment below!
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She also is an avid blogger, vlogger, contributor to the Bigger Pockets Blog, and consultant on all things Arizona Foreclosures.