What to Expect for 2013
1. Prices will rise
Prices finally bottomed. They'll go up in 2013.
Prediction is that the prices will rise from 5 percent to 7 percent in 2013.
2. Sales will rise
Industry observers say sales will climb in 2013, buoyed by low interest rates and rising consumer confidence.
Several industry observers predicted that more young people will move out of their parents' homes, triggering increased demand. So will rising prices.
First-time homeowners, who have been sitting on the sidelines waiting for a sign of the bottom, will hear about price increases in their desired neighborhood and rush to become homeowners.
Home buying by investors and flippers will continue to grow since housing provides better returns than other assets.
Move-up buyers, move-down buyers and boomerang buyers (people returning to the market after a foreclosure) also will swell the ranks of homebuyers.
3. Expect (more) rent hikes
2013 will be "a landlord's market."
4. Inventory will rise -- slightly
As prices move up, more sellers will jump into the market.
The supply of homes for sale won't go up much. For one thing, rising demand will keep inventory in check.
Other homeowners either are unwilling or unable to sell – particularly those who bought at the top of the housing market. Some can't sell because they owe more than their homes are worth. Others are holding out for higher prices.
5. Foreclosures will drop
The "shadow inventory" of pre-foreclosures continues to shrink, reducing the risk that the market will be flooded with discounted bank-owned properties.
Lenders are expected to modify more loans and approve more short sales in the year ahead.
6. Money will stay cheap
Mortgage interest rates will rise slightly, but will remain close to historic lows seen throughout 2012, industry observers predicted.
Interest rates on 30-year, fixed-rate loans will rise to 4 percent. Rates could rise a percentage point from this past year, which would keep 30-year rates well below 5 percent. But lending standards are expected to remain tight, so qualifying for home loans will remain tough.
Private lending will become more common.
7. Homebuilding will grow
2013 homebuilding will be to the highest level since 2007.
Some developers complained they couldn't build houses fast enough to meet all the demand in 2012.
Demand is out there for new homes, and it will increase over the next several years.
8. Furniture sales going up
More home sales results in more people buying furniture for their new homes.
That's just one example of how a rebounding housing market will ripple through the economy. As people see home prices go up, they're more willing to spend on home remodeling projects.
9. Commercial real estate remains weak