Housing Trends to Watch in 2013

Housing Trends to Watch in 2013

While you may have been busy making New Year’s resolutions to eat a clean diet, exercise, volunteer more for you favorite charity, the Stovall Team has been busy listing, selling and studying the local and National Real Estate Market. Expert predictions depend on the mainstream forecasts of economic growth next year being correct and assume that the economy won’t experience an earthquake from falling off the fiscal cliff.

Others emphasized that all markets are local—real estate conditions in coastal metro areas vary wildly from those in mid-sized Midwestern towns. Those caveats aside, here are OUR 3 real estate trends forecast for next year.

1. More short sales. Short sales are deals in which a home sells for less than what the borrower owes on the mortgage, with the bank agreeing to accept the sale in lieu of going through an expensive and time consuming foreclosure. On November 1, the FHFA issued new rules on short sales for Fannie Mae and Freddie Mac—among other measures, those reduce the documentation that borrowers have to show to demonstrate hardship, and borrowers now aren’t necessarily required to pay the difference between what they owe on the mortgage and the final sales price. So while foreclosure sales will keep falling, the number of short sales should rise, says Polyana da
Costa, senior mortgage analyst at Bankrate.com.

2. 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. That trend is visible in an NAR survey of buyers and sellers released in November—39 percent of borrowers were first-timers, up from 37 percent in the 2011 survey.

3. 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, says Luis Vergara of Mission Capital Advisors in New York City. That downward shift in standards will be strengthened if the Obama administration, as has been rumored, replaces FHFA head Ed DeMarco, a Bush-era holdover and advocate of tight credit standards, says Richard Green, head
of the University of Southern California’s Lusk Center for Real Estate.
Sources: The Lusk Center for Real Estate, The Fiscal Times: 10
Real Estate Trends to Watch in 2013