“It’s always wise to look ahead, but difficult to look further than you can see.” (Churchill) – from the blog Jack’s Winning Words.
There is always a rush at the beginning of each year to try to make predictions about the coming year. I would not attempt to predict the real estate market for the year. Things seemed to be getting better at the end of 2012; however, much of the run-up in home sales values was caused by the extremely tight market (very low inventory of homes for sale). The underlying, true appreciation for homes is running about 3.5-4% annually; which means a long haul to get back to pre-bust values. Most prognosticators are estimating a decade or more to recoup lost value, depending upon how deep the loss was in each area. Locally we had losses running between 30-40% in most areas and a few that got to 50% or better.
At the end of the year I reported that the market was still very mixed, with three of the markets that I track at 50% or better distressed sales in December. Overall the markets in Milford, South Lyon, Green Oak, and Brighton recovered better in 2012 than the rest of the markets that I track – Highland, White Lake, Commerce, West Bloomfield and Hartland. Home values in the better markets were at or above an average of $100/Sq Ft. Homes in the other markets were still in the $80’s and $90’s per Square Foot; however, all markets were improving by the end of 2012.
So, trying to look ahead, one can surmise that it’s still a pretty good time to buy. Mortgage rates are still low and home prices are still very reasonable. Every study that I’ve seen lately about renting vs. buying makes a strong case for buying right now.
As for would-be sellers, all I can tell you is that the market is currently a sellers’ market, because of the low inventory. That means that you’ll get top market value for the house and it will sell fast, if it is in good condition. Sure the values are still depressed, compared to what they were in 2005-6; however, if you are in a positive equity position and have been delaying your plans while waiting for the market to return – it’s back. Unless you bought at the peak of the market and/or financed above 80% of the home’s value at the time; you should be getting near (or above) your breakeven point. You should at least peak out of your bunker and get a new Comparative Market analysis done by a professional Realtor, top see where your home’s value is currently.
It’s certainly too early to make any long-range predictions about the real estate market in 2013. Too many factors play into what happens in the market and many of those factors are unfortunately under the control of our dysfunctional national and state legislatures. The same bozos in Washington who marched us right up to the edge of the fiscal cliff have a bunch of other legislation on their plates that impact real estate. They ignored most of that at the end of the year and now will have to reenact many critical laws; otherwise the real estate market could be sent reeling back into recession again. We’ll all have to wait to see what (if anything) they do about those expired laws in the new year.