OC Listings: We Give You the Keys!: January 2013

Published: Dec. 28, 2012 Updated:
Dec. 30, 2012 8:30 p.m.t
OC Register: Jeff Collins
http://www.ocregister.com/articles/year-382023-sales-percent.html

Could 2013 be the turn-around year? Forecasters say yes.

Assuming the recurring specters of recession or

global uncertainty don't upend the economy,
home sales and prices likely will go up, economists
and real estate industry experts say.
Demand will take off. Inventories and interest rates
will stay relatively low. Homebuilders will be the
busiest they've been in six years.

"It's going to be a very good year," said former
National Association of Realtors President
Dick Gaylord, a Long Beach broker. "(Interest)
rates are going to remain low. Consumer
confidence is picking up, and prices are
picking up. That's a winning combination."

Here are 10 trends to expect for 2013:

1. Prices will rise

Prices finally bottomed, and even climbed
in 2012. They'll go up even more in 2013,
forecasters say.

Economists at California State University,
Fullerton, say prices will rise from
5 percent to 7 percent next year.

Steve Thomas of ReportsOnHousing.com
was more optimistic, predicting that
prices will increase 10 percent next year.

Economists at Chapman University and the

online site Zillow.com put next year's appreciation

in the 5.8 percent to 6.8 percent range.

2. Sales will rise

Home sales were up nearly 17 percent in 2012 –

the biggest percentage gain in 14 years. Industry

observers say sales will climb even higher in 2013,

buoyed by low interest rates and rising consumer confidence.

Thomas, of ReportsOnHousing.com, predicted

O.C. home sales will grow 10 percent in the year ahead.

That would boost sales to nearly 37,700 houses, condos

and townhomes in 2013, more than any year since 2006.

Several industry observers predicted that moreyoung

people will move out of their parents' homes,

triggering increased demand. So will rising prices.

"First-time homeowners, who have been sitting on the

sidelines waiting for a sign of the bottom, will hear

about price increases in their desired neighborhood

and rush to become homeowners," according to a

projection by Irvine-based John Burns Real Estate Consulting.

Home buying by investors and flippers will continue

to grow since housing provides better returns than

other assets, the Burns report added.

Move-up buyers, move-down buyers and

boomerang buyers (people returning to the market

after a foreclosure) also will swell the ranks of homebuyers.

"Foreclosed homeowners," the Burns team said,

"will come back in droves."

3. Expect (more) rent hikes

Apartment rents increased by $155 a month,

or 11 percent, at large complexes over the

past three years.

At least two forecasts say renters should

expect more of the same next year.

MPF Research predicts a 3 percent rise in U.S.

apartment rents in 2013. The National

Association of Realtors said apartment

tenants likely will pay 4.6 percent more on average.

Said National Association of Realtors researchers,

2013 will be "a landlord's market."

4. Inventory will rise -- slightly

Bidding wars will continue to dog homebuyers

as the number of homes for sale remains relatively low.

The type of homes for sale likely will change too,

from foreclosures and short sales to more normal

"equity" sales. Builders also are ramping up

production to increase their supply of new homes.

As prices move up, more sellers will jump into the market.

Thomas said, however, that the supply of homes

for sale won't go up much. For one thing, rising

demand will keep inventory in check.

Other homeowners either are unwilling or

unable to sell – particularly those who bought

at the top of the housing market. Some can't sell

because they owe more than their homes are worth.

Others are holding out for higher prices.

"We've replaced the buyer fence sitters with

seller fence sitters," Thomas said.

5. Foreclosures will drop

The "shadow inventory" of pre-foreclosures

continues to shrink, reducing the risk that the

market will be flooded with discounted

bank-owned properties.

CoreLogic reported a 30 percent year-over-year

drop in Orange County homeowners 90-days or

more behind on their mortgage payments

as of October. The number was half the

January 2010 level.

DataQuick reported that the pace of foreclosures

was down 81 percent from the 2008 peak as of November.

Lenders are expected to modify more loans and

approve more short sales in the year ahead.

"As we squeeze out the last of the foreclosures

and short sales, we'll have a more normal market,"

said Scott P. Brady, 2012 president of the

Pacific West Association of Realtors.

6. Money will stay cheap

Mortgage interest rates will rise slightly, but

will remain close to historic lows seen

throughout 2012, industry observers predicted.

Thomas forecast that interest rates on 30-year,

fixed-rate loans will rise to 4 percent.

Chapman University predicted that rates could

rise a percentage point from this past year,

which would keep 30-year rates well below 5 percent.

But lending standards are expected to

remain tight, so qualifying for home loans will remain tough.

Some observers expect some easing, however.

DataQuick analyst John Karevoll predicted that

adjustable-rate mortgages will become

more prevalent. Brady, the Pacific West president,

said private lending will become more common.

7. Homebuilding will grow

Both Chapman University and CSUF predicted

that builders would pull construction permits for

more than 6,200 homes next year, compared to

5,200 to 5,400 permits expected this year. That

would push 2013 homebuilding to the highest level since 2007.

Some developers complained they couldn't build houses

fast enough to meet all the demand in 2012, said

Chris Porter, a manager for John Burns Real Estate Consulting.

"Some of the new home sellers have told us they

don't have enough inventory," Porter said.

"Demand is out there for new homes, and it will increase

over the next several years."

8. Furniture sales going up

More home sales results in more people buying furniture

for their new homes.

That's just one example of how a rebounding housing market

will ripple through the economy. As people see home prices

go up, they're more willing to spend on home remodeling projects.

"Typically, housing pulls the economy out of recession,"

said CSUF Dean of Business Anil Puri. "The recession has

been long, and housing has been dormant. Maybe it is time

for housing to pay its typical role of being the leader out of the
recession."

9. Commercial real estate remains weak

Despite falling vacancies and rising rental rates, commercial

real estate isn't expected to fully recover until 2014 or 2015,

industry observers say.

10. Big issues remain on the table

The housing industry has called on Congress to extend the

Mortgage Forgiveness Debt Relief Act. The measure aids

homeowners going through short sales and loan modifications.

Meanwhile, provisions of the Homeowners Bill of Rights will

take effect California Jan. 1. The measure – which provides

additional protections for homeowners – likely will slow the

pace of foreclosures. For example, lenders will be blocked

from moving forward on foreclosures on borrowers who are

pursuing a loan modification.

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