The Holidays are rapidly approaching and 2012 will soon come
to a close. As we look to 2013, there are several indicators that
the real estate market will continue to strengthen. Below is a great
article that takes a good look at what may be in store.
Real estate: Find
opportunity next year
By Carla Fried @Money
After five years of tumult, order and opportunity are finally being restored
to the housing market.
Home prices are expected to rise a modest 1% from the fourth quarter of this
year to the end of 2013, according to the real estate research firm Fiserv.
David Stiff, Fiserv's chief economist, notes that after some choppiness early
on, prices should increase 3.4% from the second quarter of 2013 to the second
quarter of 2014. In hotter regions out West, you can expect bigger gains.
"Housing is finally turning the corner," Stiff says. "There
is no reason to be fearful of further large price declines."
This creates a new playing field for homeowners, who are finally able to
sell, as well as would-be buyers who've been delaying a purchase in
anticipation that prices would keep falling.
The Mortgage Bankers Association forecasts that more and more house hunters
will start coming off the sidelines, with new-home loans for purchases expected
to jump 55%, based in dollars, in 2013.
With that increased competition, "the days of buyers sticking it to
sellers are over," says Salt Lake City real estate agent Tracie Peay.
Sellers: Don't get too excited just yet. You don't have a viselike grip on
this market either. Indeed, for many, it still makes sense to wait to get
better prices. This is especially true if you know that you won't be able to
break even on your investment by unloading your house now, once you factor in
the sales commission and other costs.
That said, don't assume that prices will be off to the races again in a year
or two.
Fiserv forecasts that between now and 2017, homes will gain 3.3% a year in
value. That's hardly red-hot. But at least the market isn't frozen anymore.
THE ACTION PLAN
Sellers
The price still has to be right
Homes in many markets are selling in a matter of weeks, often attracting
multiple bids -- but only the ones that are properly priced. Take San
Francisco. Although the city is one of the strongest sellers' markets right
now, the average home there goes for 103% of list price, not 120%.
"Buyers aren't going down the road that got so many people in trouble
during the bubble," says Dallas real estate agent Mary Beth Harrison.
Focus on the appraisal
Whoever bids on your home will probably finance the purchase. That means any
deal is still beholden to a third party.
"You can take the highest offer, but at the end of the day the
appraiser has the final say on the value of the home," says David Howell,
chief information officer at McEnearney Associates, a real estate agency in the
D.C. metro area.
With so much riding on the appraisal -- it can kill an agreement or require
renegotiation -- your agent should be present. Harrison has a tip for making
sure this happens: "The minute we have an offer, we take the keys off the
door to make sure the appraiser has to meet us to get in."
Your agent should also prep a package of pertinent information for the
appraiser, says Chicago real estate agent Fran Bailey. That includes the latest
comparable sales data and documents detailing any upgrades or renovations to
help the seller's cause. "It's part of my job to make sure the appraiser
has the correct information," she says.
Buyers
Be ready to deal
With competition heating up, casual house shopping isn't going to cut it
anymore. If you are serious about making a move, be prepared:
Three months out. Despite housing's green shoots, getting a
mortgage remains incredibly tough. The average FICO credit score for recently
denied applications on conventional purchase loans was 729. The score on
approved mortgages was 762, with a 21% down payment, monthly payments equal to
21% of household income, and total debt that did not exceed 33% of income.
On the bubble with any of those requirements? Now's the time to burnish your
finances. And if you plan to house hunt in the spring, watch your holiday spending.
Deal time. "If you want to buy, you have to be ready
to make an offer," says Howell. Plus, your first offer should be very
close to your best. "If the house has been on the market for three months
or longer, you can be more aggressive," says Bailey. "But if it's a
new listing, a low-ball bid will get you ignored."
The Money tracker: What can upset the forecast in
the year ahead...
Ben runs out of ammo. Fed chairman Ben Bernanke is lifting
housing by buying bonds to keep mortgage rates low. How much longer can he keep
that going?
The loss of mortgage deductions. Should the tax break on
mortgage interest get cut, that would throw cold water on the real estate
recovery.
Sellers sit on the fence. Homeowners could remain on the
sidelines as the ranks of buyers grow. In that case, the inventory of homes
would shrink even more, lifting prices faster than expected.
Homeowners get bullish. A spate of home construction is
already taking place in several major markets. In those regions, the housing
stock is likely to stabilize, keeping price gains modest.
Banks loosen their grip. If tight lending standards return
to historical norms, realtors argue, the market could see an additional 500,000
to 700,000 home sales next year.
Employer confidence rises. Since jobs are the engine of the
housing market, a pickup in hiring later in the year, which economists are
predicting, could accelerate a real estate rebound in the second half of 2013.
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