Real Estate Trends, Experts Cautiously Optimistic for 2013

By Gretchen Wegrich

As 2012 comes to a close, many real estate professionals are eagerly awaiting fiscal cliff developments and wondering how this will impact the 2013 housing market.

Recently released data from Realtor.com highlights national and local real estate trends that reveal what to expect in 2013.

During 2012, inventory shrank by 45 percent from peak levels in 2007, down to 1.674 million units on the market. Inventory median age also lowered by 11.4 percent over a one year period from November 2011. Looking ahead to 2013, supply and demand will continue to be a key player in the housing market.

By region, markets that bore the brunt of the housing crisis continued to rebound while more industrial areas such as the Northeast and Midwest performed poorly. In the West, California, Washington and Arizona finished 2012 by posting significant inventory shrinkage, while prices appreciated a minimum of 10 percent year-over-year.

In the Midwest and Northeast, markets remained mostly unchanged and did not see significant inventory shifts. Few areas increased year-over-year for-sale inventory, an indicator of continuing weakness in housing markets and local economies.

As prices increase, expect homeowners to begin selling and fewer individuals to be underwater on their mortgages, said Richard Green, director of USC Lusk Center for Real Estate. Green noted that he had been surprised by the strength of the 2012 end-of-year real estate market.

He also suggested that for real estate professionals transfixed by the fiscal cliff, it was unlikely to be as disastrous as the media believed.  

“The fiscal cliff is overhyped,” he said, adding, “It’s not a cliff, it’s a slope.”

Green’s analysis matches a recently released report published by Barclays on Dec. 17. The report stated that were the fiscal cliff to be met, the housing market would be only moderately affected.

Fannie Mae chief economist Doug Duncan agreed. In spite of unsteady large-scale economic conditions, he said, “We anticipate housing and mortgage activity to gain momentum in 2013.”

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.