It’s not just economists watching the housing market with bated breath, waiting to see if this really is a turnaround. With interest rates staying low and housing prices starting to rise, it appears that might be the case. Here are the trends industry analysts are watching in 2013.
Rising Inventories?
Now that housing prices have started to rise, it’s hoped that the dearth of properties on the market will start to correct itself. Rising prices will start to convince homeowners it’s worth selling and, if the trend is strong, may stimulate building again.
Rising Rents?
The improving selling conditions come at a cost, though. Buying becomes less affordable. And it’s not only that home prices rise — there’s indications that rents will increase as well in the most expensive markets, squeezing people in urban areas the hardest. The good news is that homeownership is still more affordable than rent in most of the country, and may remain so for at least the first part of 2013.
Slashing Deductions?
The stimulus spending and expanding refinancing has been welcome, but with the fiscal cliff looming, it’s very likely that the mortgage interest deduction will get the axe. After all, it costs the government more than $100B in revenue annually. We won’t know this for sure for a little while, and we won’t see the effects on the housing market for even longer, but that’s why we’re watching the trend closely.
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