Predictions for 2013

Posted: January 15th, 2013 by Brad

We forecast at the beginning of last year our housing market would continue its recovery, and that 2012 would be a good year for real estate: http://justrealseattle.com/2012/01/predictions-for-2012/

While we didn’t go out on a limb to predict price increases, we certainly alluded to the possibility. We are seeing steady price increases (or the amount of home one can afford shrinking). Still, compared to swelling rental rates, homeownership is often more advantageous in our present market climate, especially with near-historic-low mortgage interest rates.

So what’s ahead for 2013? Sometimes to see forward it’s important to look back. After all, past behavior is often a good indication of future behavior. We sense some deja vu, taking us back to 2003 when our economy began rebounding from the early 2000’s deep recession. Then interest rates hit historic lows for that time period, and our housing market really began picking up steam just before we started seeing substantial rates of appreciating values. Loosening lending guidelines also played a key role in this.

In present day, many homeowners have taken advantage of incredibly low interest rates by refinancing. With reduced costs for housing, many would-be-sellers may have chosen to stay put for the time being. Pared with pent-up demand for housing, we’ve experienced a shrinking inventory trend during the past 18 months.

We think lending guidelines will become a little less stringent. Inventory will remain lean this spring. Prices will continue their upward climb along with rents.
Several months ago, we posted about post-recession market trends: http://justrealseattle.com/2012/05/post-recession-market-trends/ Again, if past behavior offers any indication, we can expect the market to robustly rebound in the days and months ahead. Interest rates are expected to gradually increase as well. This could eventually put a chill on the market, though typically not before panicked buyers create a bit of a buying frenzy. Only time will tell …

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