The Housing Market Rebound: Will it Last?

by melanie on June 5, 2013

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(1)Lynton House Abbotsleigh School-a

Analysts across the board agree that the dismal downward spiral of the United States housing market finally reached bottom in early 2012. Since then, average home prices have risen nearly 8 percent, according to Forbes Magazine. While the housing market has irrevocably changed since the recession, the general consensus is that it’s now turned a corner and the path to a full recovery is ahead. But some economic researchers have concerns about the recovery and whether it’s built to last. To accurately forecast the future of the market, it’s important to take a look at the factors influencing the boom. Is 2013 the right time to buy? Are prices going to climb higher or is the housing market still in jeopardy?

1. A Boom Generated by Investors

The low interest rates and rock-bottom prices generated by the recession made the housing market prime territory for investors looking to buy rental property or foreclosure homes they can fix up and sell. The recession has even led to inexperienced investors taking the plunge for the first time, similar to what happens in a stock market bubble. When a growing demand drives up the prices, the boom can’t last, especially because there may not be as many renters to fill these rental properties as investors hoped for. It’s inevitable that prices in hot markets will slow, and investors could see less of a return. That’s not necessarily a cause for panic, because smart investors will focus on the areas where people are renting and properties where long-term value will increase. But it still means the country has to focus on helping renters become buyers again.

2. Is the Economy Strong Enough?

These days, concern for the housing market is more and more linked to concern about the influences of the economy in general. Housing has proven it can rebound strongly, but job numbers and spending cuts threaten to drag it down. The sequestration could hit homeowners hard, and job numbers have not yet recovered in the same way that housing prices have. The good news is that mortgage rates remain low, about 3.5 percent for now, so it’s still a good time to buy a home if you can afford to. There are still many great deals to be had, especially in the most thriving areas of the country. And if the slowing rate of price increases does level off, it could be a good thing. Research firm Clear Capital expects only around 2 percent in price growth this year, so homeowners are less likely to get outbid by investors or find themselves overwhelmed by their mortgage payments.


3. Buying a Home in 2013

Yes, there are risks and disadvantages the housing market must overcome, but for many, 2013 is becoming an ideal time to purchase their first home. The Wall Street Journal reports that the number of homes for sale fell to a 13-year low in January 2013, leading to a very normal and healthy level of competition in the real estate market. And yet prices remain at 30 percent below their peak. The reason there are so few houses is because many homeowners are still underwater and owe more than their home is worth, plus the banks are taking longer to foreclose than in the past. When these houses finally do reach the market, competition will die down while prices stay low, which is what analysts are afraid of. But for now, buyers can take advantage of the renewed frenzy by learning to compete.

The changing face of the housing market should end up benefiting buyers, whether the recovery continues smoothly or hits a few bumps along the way. Buying property should always be treated as an investment, and if you invest wisely now, you could come out a winner once the economy finally makes it up the mountain.

Writer Robin Knight is an avid blogger and writer. Interested in investing in Florida real estate? Look into homes for sale in orlando.




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