January 18th, 2013
In her MSN Real Estate article, “8 ways the housing market has changed for 2013,” Melinda Fulmer sheds some light on anticipated housing trends and changes for 2013, and what people looking to buy a home this year can expect to see as a result.
1. Home prices should increase, but only by a bit. With the economy bouncing back, home prices have been on the rise for 10 consecutive months. According to the National Association of Realtors, the national median home price in November had increased 10.1 percent from the same period a year earlier.
While analysts think the upward trend will likely continue, Clear Capital projects a national hike of just 2.1 percent – which is good news for people looking to buy.
Only eight out of 50 major housing markets across the country are expecting to see a drop in value, which is good news for homeowners and consumers overall.
2. Loans will cost more. Experts have been predicting increases in interest rates for several years now, but all signs show that we actually will see a hike in 2013 – though no one can say exactly how much.
For those looking to secure a Federal Housing Administration loan, you’ll see a hike in fees this year.
As MSN explains,
“The Federal Housing Administration Fiscal Solvency Act of 2012 gave the FHA authority to raise premiums to as high as 2.05% annually to build and maintain its reserves, which are at record low levels. If that happens, the increase would tack an additional $133 onto the monthly payout for a $200,000 loan.”
3. Inventory is scarce. The number of homes on the market is down 22.5 percent from this time last yearly, mostly because it’s a prime time to buy – for both potential homeowners and investors – but not quite as ideal to sell.
With home values down, many owners would rather wait it out and see if the value bounces back, rather than selling now and potentially missing out on some extra revenue.
MSN analysts think demand, historically low interest rates and higher home prices will push more people to sell this year, but home shoppers should move quickly on desirable properties.
4. More buyer protection. While the Ability to Repay rule, an initiative of the Consumer Financial Protection Bureau, doesn’t go into effect until 2013, many lenders will start implementing it this year.
The new law will require lenders to scrutinize and provide employment information on buyers to assure they can pay back their mortgages.
5. Home equity loans are easier to secure. Rates on home-improvement loans are finally dropping after shooting up in 2009.
According to MSN, “Home-equity loans became much riskier for lenders in recent years, as home values declined and huge waves of people began defaulting on their mortgage. Equity lenders get paid only after the primary mortgage lender gets its money, so many lenders were taking losses on these loans as distressed-property sales failed to recoup enough to satisfy these second liens.”
Since less people are foreclosing on their homes, equity loans are now bouncing back.
6. Fewer distressed homes on the market. While foreclosures are undoubtedly still a problem for millions of families, banks are working to keep delinquent homeowners in their homes, rather than taking the short-sale route.
With homes that are foreclosed, some banks are going strange to investors to sell off properties, since they’re typically less risky than individual buyers. Investors then do a little work and flip the homes, and they’re no longer super affordable, or rent them out inside of selling.
This is very good news for homeowners who in past years saw the value of their neighborhoods decline with foreclosures, but it makes landing a true bargain more difficult.
7. More new homes up for grabs. The number of building permits for new single-family homes and condominiums pulled in November was up 3.6 percent from October and a whopping 27 percent from November 2011.
The uptick in construction suggests buyers could have more flexibility in finding and customizing the homes of their dreams.
8. A lull in the sale of luxury homes. Many high-end homeowners rushed to sell their luxury homes in 2012 to avoid paying the capital-gain tax hikes that were brought on by the Fiscal Cliff deal. As a result, the inventory of luxury homes is now down. Experts as a result predict a slowdown in such sales for the start of the year.