Where Is The Real Estate Market Headed In 2013 – Good Morning everyone and Happy New Year, I hope you all had a relaxing Holiday.
As most of us know by now, the “Fiscal Cliff” has been averted (delayed) for a few months. The legislation that was passed averted much of the fiscal cliff’s negative near-term economic impact by extending the Bush-era tax cuts for the majority of Americans. It also extends long-term unemployment benefits that were set to expire. Had the House not acted, and the tax cuts enacted last decade expired fully, broad tax increases would have kicked in, as would $110 billion in automatic cuts to domestic and military spending.
The BIG WIN is for Homeowners who are Short Selling. The Mortgage Debt Relief Act was extended. This was a paramount issue that would have affected tens of thousands of the current Short Sale transactions that are currently pending. Without that Bill being extended, a very large portion of those selling would have been on the hook to pay the Capital Gains Tax due on the shortage . . .
Either way you slice it, neither side won. We still have to deal with the remaining items in two (2) months that were extended. This debacle includes the looming “Debt Ceiling” that the President has simmering on his desk. Hopefully the lessons learned from the last flop in dealing with that matter will serve as guidance moving forward. We can only hope . . .
Now to Real Estate and what we should expect in 2013.
2012 closed and left us on track to register the first yearly gain since 2006. The rise was due in part to stronger demand, a fall in inventories, and RECORD low Mortgage rates. The question now moving into 2013 is going to be – we will see the same with slow growth, or will we see another sector take root and push the Real Estate market even higher? Will Congress allow the Lending Community to offer new loan programs to take affect? Is it time we finally saw the return of Stated Income (SISA/SIVA) loans?
I can’t tell you how badly the Real Estate Market needs to see some sort of secondary lending sector come back to life. In CA alone, between 2003-07, Stated Income products for loan amounts above $450,000.00 made up 68% of the loans that were funded during that period. Here in San Diego County that number was 3.4% higher.
Recovery from what I can see will continue in 2013. CAR’s December Report indicates the same sentiment.
The issues moving into 2013 will still be limited inventory. These conditions are not expected to disappear anytime soon. The remaining drivers from 2012 that we are still seeing continue to plague the market. Multiple offers and above market asking prices will most likely remain thru 2013. As we all know from the 2003-2008 bubble, this mix creates a potentially volatile market place aligned towards the seller. Buyers are then forced to come up in price in they want the property. Today’s buyer(s) is not the same buyer(s) we saw in 03-08. These days still having a clear recollection of what happened, buyers are very reluctant to raise an offer or add more money to close the deal. The since of urgency, more so the “must have” mentality is gone.
If sellers will remain reasonable, keeping list prices within fair market, and buyers can see the value in that, then we will reach the balance we desperately need. I think 2013 will be that year.