Now well into 2013, we’ve seen a noticeable comeback for the real estate market thus far, which includes an 11 percent increase in home prices all across the country. While this is undoubtedly good news for sellers nationwide, the question remains whether it is too late for potential buyers to get a great deal this year.
According to an article from The Wall Street Journal, there are actually three prominent reasons why a buyer can still benefit from the real estate market during 2013:
Too Few Homes – Data provided by the National Association of Realtors shows that out of 150 major metro areas, 133 existing home prices rose during the first quarter of this year. While this is a great sign for the overall recovery of the housing market, there is still plenty of room to grow – which is good for future home buyers.
As per Real Estate Executive, Wendy Forsythe, pent-up demand can happen in many different markets. In relation to real estate in particular, “population growths, household formations and purchasers wanting to return to the market all suggest more real estate interest.” While the U.S. population grew by over 14 million between 2006 and 2012, construction of new homes was depleting, causing 17 million adult children to move in with their parents. Now all those individuals are eager to find homes and get out on their own.
Additionally, as more and more immigrants make the move to the States, demand for houses will also increase. A recent report from the Urban Land Institute and PwC sums it up by stating that “housing markets appear primed to hold relative values, and population inflows from overseas almost guarantee steady future demand for new homes.
Foreclosures and Distressed Properties – It’s no secret that our country saw its fair share of housing foreclosures over the past few years – 5.1 million between 2006 and April of 2013, to be exact.
According to Forsythe, “The foreclosure meltdown clearly impacted home values nationwide. As we reduce the distressed property inventory, it means home values are more likely to rise. This is because fewer homes sold at discount will show up in local comps.”
Luckily, the number of foreclosures nationwide has begun to decline, which in turn has brought about the “boomerang” buyers who experienced financial issues in the past few years, but are now back on track and can qualify for mortgage loans again.
Mortgage Rates – Having seen record lows in 2012, mortgage rates are on the rise once again. Logically speaking, it would be more beneficial for potential buyers to take advantage of this now before interest rates reach a point again where real estate becomes unattractive.
To sum it up, Forsythe closes by saying, “Higher rates impact affordability, but affordability remains attractive in many areas. Even after a year of rising home prices, housing today is still less expensive than at the 2007 peak. Many opportunities to buy and lock-in low rates remain, opportunities which may evaporate over time."