Wondering what the Real Estate market holds for the next year? Should you buy, sell, invest? Here are some of the latest Trends in Real Estate according to experts.
Rising home prices. The slow pace of new-home construction is pushing prices up, NAR forecasts average home prices to rise 5 percent next year, after a projected increase of 6 percent this year.
Rising rents as more young people enter the market. 3 to 5 million people, most in their twenties and thirties, who have been riding out the shaky economy by moving back in with their parents or staying with friends. Now, as they start to get jobs, they’re looking to rent.
Fewer foreclosure bargains. The chance to snap up a bargain-basement foreclosure could be fading.
More short sales. Expect more Short sales on the market as foreclosures are released by banks.
More first-time home buyers. A report from consulting firm Deloitte & Touche on key issues in commercial real estate for 2013 predicts that growth in demand for single-family homes next year will likely be driven by first-time home buyers.
Higher home construction costs. Building materials like sheet rock, lumber, and copper are at high prices even though levels of home construction remain low, says Dotzour. The same is true for construction labor costs
Property management boom. It’s a great time to be a property manager. That intensified the trend already underway toward investors snapping up distressed properties to rent–the number of homes purchased as investments rose 65 percent in 2011 over 2010. Many of those investors are now using professional property management companies to rent and maintain their purchases, which has created huge demand for their services.
Rising mortgage interest rates. Mortgage rates have been at historic lows, so there’s only one direction for them to go. The NAR predicts that rates will gradually rise to average 4 percent next year, up from about 3.5 percent in September of last year.
Easier credit standards. On average, would-be borrowers now need a FICO credit score in the 760s to get a mortgage, much higher even than the years before the easy-credit housing boom began, according to the FHFA. That should start changing next year–qualifying scores will start dropping as more qualified buyers come into the market and lenders compete to offer them loans.
Two-tiered home-building industry. Banks have been reluctant to make construction loans—only 22 percent of the country’s largest banks are making them. The result could be more consolidation in the home building industry next year and, ultimately, less competition and higher prices for everyone.