5 Real Estate Trends to Look For in 2013

 

Predicting trends during volatile economic times in American is no easy task. However, we are going to give it our best shot. We strongly believe these are the five real estate items we should keep an eye on in 2013:

Demand for Housing Will Continue to Surge

The housing market has turned the corner and there is no reason to believe that buyer demand will not maintain momentum throughout 2013. Household formations shot up to boom-time levels in 2012 and are projected to increase at even a faster rate over the next twelve months. A lack of inventory will be more of a challenge to sales increases than will a lack of demand.

Generations X and Y Will Prove They Believe in Homeownership

Contrary to what many have hypothesized over the last few years, young adults (18-35 year olds) are just as committed to homeownership as previous generations. Recent studies have shown:

  • 43% already own a home
  • 72% see homeownership as part of their personal American Dream
  • 93% of those currently renting plan to buy a home

This, along with the increase in household formations mentioned above, makes us believe that 2013 will be the year that many of these young adults will jump into homeownership.

Prices Will Continue to Increase

Pricing of any item is determined by supply and demand. Demand for housing will remain strong throughout 2013. At the same time, the supply of homes ready for is shrinking in many parts of the country. Outside of a few states that still have challenges with large inventories of distressed properties (NY, NJ, CT, IL for example), prices will appreciate nicely.

Even in the areas that are still dealing with high percentages of foreclosures and short sales, prices will not tumble dramatically. The increase in demand will absorb much of this inventory. In these areas, prices will either flatten or perhaps soften to a small degree.

Move-Up Sellers Will Return in Great Numbers

Perhaps what many will find as the biggest surprise of 2013 will be the return of the ‘move-up’ seller. Over the last several years negative equity has prevented many of these sellers from moving up to the house of their dreams. However, with prices recovering, more and more of these sellers will realize that now may be their greatest opportunity to make the move to a lifestyle they always wanted.

With home prices expected to increase and more stringent mortgage qualifications (QR and QRM) scheduled to be announced this year, we believe that the first half of the year will bring many of these sellers/buyers to the market.

The Consumer Will Demand That Their Agent Be an Expert

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as experts. These industry leaders will dominate their markets.


CFPB Stops Two Operations for Allegedly Scamming Homeowners

The Consumer Financial Protection Bureau (CFPB) put a stop to two companies it believes took part in mortgage modification scams that cheated thousands struggling homeowners.

The CFPB alleges Gordon Law Firm and the National Legal Help Center amassed more than $10 million after charging consumers for services that falsely promised to stop foreclosures or provide modifications.

At the bureau’s request, U.S. District Court judges in California ordered both companies to halt operations and froze their assets.

“We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure,” saidCFPB director Richard Cordray in a release. “We are especially concerned with those who misrepresent government programs or websites to divert distressed homeowners from needed assistance.”

The CFPB’s complaints allege that the defendants in both cases violated the Dodd-Frank Act and Regulation O. According to a release from the CFPB, the laws prohibit unfair, deceptive, or abusive practices.

The CFPB alleges violations in both cases include illegally charging upfront fees ranging from $1,000 to $4,500, claiming affiliation with the government, misleading homeowners into believing modifications would be secured, and instructing consumers to stop paying and stop contacting lenders.

The CFPB also alleges the defendants stopped returning calls and emails from customers after taking thousands of dollars in illegal fees from distressed homeowners.

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability referred the case involving the National Legal Help Center to the CFPB.


Hillsborough Title Would Like to Welcome Kristin Schmid

 

Kristin Schmid, Closer at Hillsborough Title/Tampa Bay Title of St. Pete – Kristin was born in Winter Haven, and has resided in the Bay Area for over 2 years. Kristin has over 9 years experience in the title insurance industry, and could not be more thrilled to now call Hillsborough Title/Tampa Bay Title “home”. When not diligently working to close files, Kristin can be found partaking in outdoorsy activities, such as boating or fishing. She is also a huge animal lover!

Kristin can be reached at: Kristin.Schmid@TampaBayTitle.com 


Rising Prices Could Lift 3.5M Homeowners Out of Negative Equity

While almost one-quarter of homeowners remain underwater, rising home prices over the past year have some economists hopeful negative equity could begin to diminish in coming months.

“The negative equity problem is still crippling many homeowners and the wider economy,” Capital Economics stated in a report.

In addition to the almost one-fourth of homeowners who owe more on their mortgage loans than their homes are worth, almost half of homeowners do not meet the 80 percent loan-to-value ratio required for a standard refinancing.

While “[a]dmittedly, the recovery is still in its infancy,” Capital Economics sees the potential for 3.5 million homeowners to move out of negative equity positions over the next 12 months.

CoreLogic reports prices have risen 5 percent over the past 12 months, and Capital Economics reports the greatest movement is occurring in the same locations that experienced the greatest price declines and highest instances of foreclosures and negative equity during the housing crisis.

For example, about 40 percent of homeowners in Arizona and Florida are underwater. However, home prices have risen 18.7 percent and 6.3 percent, respectively, in these two states over the past year.

While Capital Economics is sticking to its prediction that house prices will rise about 5 percent next year, the economists admit “the upside risks to that forecast are clearly rising.”

So far this year, rising home prices have helped 1.3 million households rise out of negative equity, according to CoreLogic.

If home prices were to rise by 10 percent next year, about 3.5 million borrowers would be lifted out of negative equity and 6 million would become eligible for standard refinancing after seeing their loan-to-value ratios fall back to or below 80 percent.

“The faster prices rebound, the quicker the negative equity problem will be resolved,” Capital Economics stated.

With home prices still about 27 percent below their 2006 peak, 10 percent under-valued compared to current rental rates, and 20 percent under-valued compared to per capita incomes, Capital Economics sees no need for concern over another bubble as prices continue to rise.

By: Krista Franks Brock, DSNews


Luxury Housing Market Beginning to Surge

The National Association of Realtors(NAR) in their last Existing Home Sales Report revealed that sales of homes over $1 million dollars in the country increased 44.1% over the same period last year. One of the reasons for this increase is that financing in the jumbo mortgage market is becoming more readily available.

In an article last week, The Wall Street Journal reported that sales of upper-end homes are increasing by a larger percentage than the rest of the housing market. They came to this conclusion by looking at mortgages in this sector. Here is the breakdown:

  • Home sales using a jumbo mortgage* had year-over-year growth of 7.9% through September, compared with 2.7% for non-jumbo sales
  • Homes sold in major metro areas with a loan of $1 million or more were up almost 28% through September compared with the same period last year. Similar sales with loans of less than $1 million rose 8.5%.

The luxury market is again emerging. It may be time to buy the home you have always dreamt about.

*Defined as $417,000 and up in most places ($625,500 and up in high-cost areas).

By: The KCM Crew, KCM Blog