Could you get priced out of the housing market in 2013?
January Buying Advice: In some areas, the recovery is causing double-digit increases in housing prices, making it difficult for many people to afford to buy.
Some real-estate analysts are predicting that the nascent housing recovery could accelerate more quickly than expected in 2013, jacking up prices in some areas by double digits. Would an increase like that price you out of the market?
In this installment of Buying Advice, we'll look at the forecast for prices in the year ahead and examine how this outlook might affect your home search. We'll also check in with the latest housing data and get some advice on the best way to evaluate a condominium's association fees. (Bing: Homebuyer checklist)
Can you afford to wait?
The housing recovery seems almost too new to pose much of a threat to affordability. But in some areas, it's chugging along a lot faster than in others, as demand pushes up against a dwindling supply of homes for sale.
J.P. Morgan last month revised its U.S. housing forecast upward, predicting an overall gain of 3% to 4% in home prices for 2013. In some markets, however, the pace of gains has already been dramatic enough to strain the budgets of many first-time buyers before the spring selling season even begins.
Phoenix saw the biggest increase in year-over-year prices in October at 21.7%, according to S&P Case-Shiller data. Detroit, Minneapolis, San Francisco and Miami also posted big gains: 10%, 9.2%. 8.9% and 8.5%, respectively. With increases like that, price-sensitive buyers in these markets have cause to act quickly or risk being priced out.
Not so in many other markets: Prices in Case-Shiller's 20-city index were up 4.3% year-over-year in October, the last month for which data are available. Chicago and New York actually posted small price dips, and Boston and Cleveland saw gains of less than 2%. In those markets, buyers have less incentive to jump off the fence quickly.
- MSN Money: They'll pay you to move here
One perk that is expected to stick around and mitigate rising prices: low mortgage rates.
"I expect the average 30-year fixed mortgage rate to stay under 4% for most of the year," says Greg McBride, senior financial analyst with Bankrate.com. "It could trend slightly higher if economic improvement continues, but could move lower if the economy falters."
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Given the increase in demand and prices, Trulia's Housing Barometer says the real-estate market was 51% back to "normal" in November. Indeed, the almost 6% rise in existing-home sales in November seemed to back up economists' rosy view of 2013. (More on that below.)
Of course, the wild card, J.P. Morgan analyst John Sim says, is the so-called shadow inventory of distressed homes, which CoreLogic pegs at 2.3 million units, a seven-month supply at the current sales pace. Just how quickly this huge supply of homes is sold, and what the homes sell for, will help determine how quickly home prices will rise in some large markets.
- Realtor.com: What kinds of homes are for sale right now?
And with an eye to costs, many economists are keeping their eye on the mortgage-interest tax deduction, which many lawmakers are longing to eliminate or cap to help stop leaks in the federal budget. Changes there could raise the cost of homeownership, which could depress values in some high-cost markets.
- On our blog, 'Listed': Housing saved from 'fiscal cliff'
The biggest factor shaping the housing market in 2013, however, is supply: How many sellers will be motivated to list their home, and how many builders will start new ones? If inventory increases, it will help ease the bidding wars and make it easier for buyers to land a home.
How long can you afford to wait for the right home?
(MSN Real Estate wants to know: What was the biggest mistake you made in buying a home? Share your experience with us on Facebook or email us at firstname.lastname@example.org and it could be used in an upcoming column.)
Existing-home sales rose 5.9% to 5.04 million in November from a downwardly revised 4.76 million in October. They were up 14.5% from last November, according to the National Association of Realtors.
"Momentum continues to build in the housing market from growing jobs and a bursting out of household formation," says Lawrence Yun, NAR chief economist. Low apartment-vacancy rates and rising rents are causing more people to consider buying rather than renting.
When you can buy for less than it costs to rent and with rates at all time lows, THESE will be considered "the good ol' days" in a few years, "back when you could buy for under the costs to build and get a 3-4% mortgage to boot."
Death, Taxes and Inflation, those you can count on. Pay attention to the latter or be left behind.
Good luck with your decisions.
This article is, as others have stated "pure BS". The housing market will not go up until people find decent paying jobs. It's that simple.
Good paying jobs, if you can find a job at all, are gone. Until this country stops the corporate greed that Wall Street and big corporations started things such as houses are going to continue downward. No money no products / services will be bought.
Americans are much wiser, smarter, and no longer naive. America is lucky to avoid recession and you are lucky to bring food to table. Why do we have to be a victim and mortgage slaves again?
An article like this was in our local news for Vegas...B.S. we are not seeing any changes.
Believe me or not, I have seen the house building here in my area, and other places, when in the construction process. And believe me or not, such are being build cheaply, wall construction nails in most instances don't even connect as meant to connect to opposite area, as meant to be, and the building goes on. Cheaply made, build, and with out respect to the building and purpose, but who cares?????
Whoever buys the house does not know or seen how cheaply, and irresponsible such was build, when it breaks down, it's the buyers problem, and such buyer is stuck with the problem. Do You Really THINK!!! THE builders CARE! Hell No! They are just out to make the money, and whatever house you buy, problems after purchase are yours, and they could CARELESS, if you end up on the street again.
I say purchase the LAND PROPERTY, clean no houses/buildings, make sure electricity can be supplied to such with out a large expense. Hopefully water can be run to property, or a well can be dug to supply water for the property, and build your OWN......... either little by little, or if you have the ability and income, all within a year or so. In such way you know what is being build, you know such is being build sturdy, and solid, with pride and something to be proud of, you build and have what you want, need, and expect such to be when finished. Maybe small at first, but with options to expend later.
If you are lucky enough to have a good family, a friend or a couple of friends, use such for help in building, and vice versa, as the saying goes, one hand watches the other. But if such is not the case, help is always around, being one looks around and asks.
One can not go wrong on land property, even though you pay property taxes, such is always an investment on oneself, maybe for the kids, and family later.
All in all, a sure way to build your own house, and using common sense, a good way to stay out of mortgages, and foreclosers on someone else's, bank accounts.
We are having bidding wars on well priced properties, and low inventory in Santa Monica and Los Angeles. Most of my home buyers are simply waiting for more inventory to come on the market. Many home sellers are hoping to net more money later in the year.
This article is a complete lie like so many other lies that are being fed to the general public.
This is the new world order, get used to it, its not going away.......ever.