For the first time in years—yes years—all residential real estate market indicators are pointing in the right direction. There has been a reduction of existing inventory, there have been sightings of new construction and lending rates remain in favor of the borrower.
This is due in part to the end of the muck and mire created by the foreclosure boom. Its conclusion is in sight as buyers, investors and banks have chipped away at the issue. And market confidence is returning, which has contributed to the feeling that the worst is over and 2013 will mark the turnaround for real estate.
It is a sentiment shared by many including real estate guru Barbara Corcoran, chairman of Barbara Corcoran Inc. and of ABC’s Shark Tank. She is convinced real estate is on the rebound noting a steep increase in home sales lowering available inventory. “For those buyers who have been waiting to buy at the very bottom, sorry you missed it. The bottom happened in September,” she said. “But with interest rates likely to remain at record lows into the new year and most homes still thirty percent cheaper than they were before the bubble burst, it’s a wonderful time to buy.”
Dr. Pearl Kamer, Chief Economist for the Long Island Association agreed, noting 2013 should see a gradual recovery of the local housing market (yes, recovery) with housing prices expected to escalate by about two percent annually over the next several years. That may not sound like much, but it represents a huge reversal in fortune for a market that has been in a negative spiral far longer than anyone predicted.
Real estate mogul Dorothy Herman, President and CEO of Prudential Douglas Elliman, believes that consumers will continue to be cautiously optimistic about housing in 2013 as they have been for the latter half of 2012. Whether or not that confidence will remain depends in part on how Washington manages the nation’s finances early next year, including the maintenance of low interest rates. “We expect to see more sales next year,” said Herman. “Mortgage rates are bringing more people into the market and we’re expecting them to remain low through the end of 2013.” But, Herman lamented, for every silver lining there is a dark cloud as tough mortgage lending standards may stifle market exuberance.
Given recent market volatility, that may not be a bad thing—barring it does not become an impasse. Happy New Year indeed.