Real estate trends to watch in 2013

January 16, 2013

Staff Report

The year 2012 was a significant growth period for the real estate industry. After five grueling years, Americans are finally feeling optimistic about the housing market. But what exactly does the market hold for the coming year?

To pinpoint the top trends, we cross-referenced a number of highly-regarded industry investors, experts and surveys with opinions about the local market from Rockford Area Realtors and Brokers,” said Steve Bois, CEO of Rockford Area Realtors. “We see a number of major trends and housing opportunities affecting the Rockford-area market in the coming year.”

1. Housing demand will continue to surge. Household formations grew to boom-time levels in 2012, and are projected to increase at even a faster rate over the next 12 months.

2. Inventories will remain tight. The average monthly inventory of 2,271 homes in the Rockford market in November was the lowest level since May 2005. The number of homes for sale will remain relatively low.

3. Money will stay inexpensive. While interest rates have been at historic lows this year, the National Association of Realtors predicts that rates will gradually rise to an average 4 percent in 2013 — still historically low.

4. Sales will rise. Home sales were up 18.7 percent for 2012 versus 2011 in the Rockford market. Low interest rates and rising consumer confidence should lead to higher sales in 2013.

5. Prices will rise. The slow pace of new-home construction and lower housing inventories will help push prices up slightly. Inventories reached a nine-year low in December.

6. More rent hikes. Some 3 to 5 million people in their 20s and 30s who have been riding out the shaky economy living with their parents or staying with friends will look for their own apartments now as they start to get jobs.

7. More first-time home buyers. Deloitte & Touche predicts that growth in demand for single-family homes in 2013 will be primarily driven by first-time home buyers (who made up 39 percent of buyers in November 2012 nationally).

8. Foreclosures will drop. As the “shadow inventory” of pre-foreclosures continues to shrink, lenders are expected to modify more loans and approve more short sales in the year ahead.

9. Return of the move-up seller. This may be the biggest surprise trend of 2013. Over the last several years, negative equity has prevented many of these sellers from moving up. With prices recovering, more move-up sellers will realize this may be their greatest opportunity to move up to the house of their dream.

10. A dogged housing recovery. Real estate will continue to meander along a slower-than-normal recovery track behind a recuperating U.S. economy, dogged by ongoing world economic issues.

From the Jan. 16-22, 2013, issue

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