Real estate trends to watch in 2013:
Prices are Rising. According to the S&P Case/Schiller Index prices were up 4.3 percent nationally over the last year. Although the Queens/Long Island region has seen less growth because of distressed property sales i.e., short sales and foreclosures and the impact of Sandy (November 2012 contracted sales declined 14.6 percent over last year at this time per MLSLI). The region has had 11 consecutive months of increased contracted sales leading up to November. This pace will resume in the coming months as demand returns.
Interest Rates Will Fall Further. According to a December 18 Inman News report, mortgage rates are expected to fall even further in the next year. Current rates at 3.7 percent may decline to 3.4 percent in 2013 as a result of the Federal Reserve’s continued efforts to keep rates low.
Inventory of Homes For Sale Are At Very Low Levels. Inventories of unsold homes on the market nationwide fell to 4.8 months supply in November down from 5.3 months supply in October. Inventory in Queens/Long Island was down 19.6 percent over last year at this time. Six months of inventory represent a balanced market with equal numbers of buyers and sellers. Below six months of inventory we see a seller’s market as multiple bidding occurs and prices ultimately rise.
Uncertainty Still Affects the Credit Markets. As provisions in the 2010 Dodd-Frank legislation are debated and instituted features such as the Qualified Residential Mortgage (QRM) and the Qualified Mortgage (QM) will affect lending standards. Credit will flow more easily if the regulations are clarified in a reasonable way.
So is 2013 a time to make your move?
Those Looking to Trade Up. At these low interest rates you can make the move to a larger home and lifestyle you’ve always wanted. Even if you didn’t recoup all you wanted from the sale of your house, the future appreciation on this larger home will most likely prove to be a wise investment.
Those Looking to Size Down. With fewer homes on the market and many buyers looking to take advantage of record low interest rates, it is a good time to sell before there are more homes in competition in the spring/summer.
Those Waiting for the Market to Return to Its Peak. Waiting until prices go back to their 2006 peak could take 5+ years. At that time we could have higher interest rates that would impact rising prices. Best to look at what is best for you and your family and make a move – or not – based on those factors rather than reaching a selling price that was fueled by an unusual set of market circumstances.
Buyers/Renters. What better combination – decades-low interest rates and home prices off their highs but edging up, assuring you future appreciation on the home you buy today!
Investors. Investing in real estate gives you the control you don’t have with many other forms of investment such as stocks or bonds. Just do your homework, understand your costs and the market you are investing in. Get good advice from an area expert and begin to build your wealth through real estate.