Coming year to be positive for real estate industry

In 2012, we saw the continuation of the housing recovery in California with solid sales volume and price increases throughout much of the state. In addition, many were helped via loan modifications and short sales from being underwater on their homes.

Several have said that this recovery is artificial. There is no question that government intervention played a major role and will most likely continue for the foreseeable future. The biggest change in 2012 was the dramatic decline in foreclosure sales. Per, over the past 12 months, notices of default plunged nearly 50 percent year after year, foreclosures sales fell 27.7 percent, and REO inventories declined 34.9 percent during that same period.

For 2013, Realtors largely expect more of the same. Demand will remain strong thanks to low interest rates and affordability. Available homes will remain limited largely due to foreclosure intervention via government programs. Prices will rise but constrained by appraisals, via lack of comps, and bidding wars beyond recent sales. This practice will continue to make it difficult for first time home buyers.

The National Mortgage Settlement Program, the Home Affordable Modification Program, and the California Homeowner Bill of Rights legislation that goes into effect Jan.1, 2013, will all continue to put downward pressure on foreclosures and foreclosure inventory.

Foreclosures have been a significant source of supply since 2008 and their continued decline will hurt sales volume in 2013. Short sales will likely increase as a result. Banks benefit from short sales over foreclosures including faster disposition, better recovery of value, less political opposition, and reduced risk of homeowner lawsuits. However, if the tax exemption established under the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended past its expiration date of Dec. 31, this too will affect some homeowner’s decision to short sale.

We still face a number of risks in 2013: the so-called fiscal cliff will be resulting in higher taxes, the Middle East continues to be highly volatile, and the Eurozone debt crisis continues to make headlines.

Despite these risks, we are still optimistic regarding housing in 2013. Fewer people will be underwater by year’s end and housing will prove to be a safer investment for your money than elsewhere.

Mike Mason, broker/owner of Mason Real Estate can be reached at (951) 296-8887.

2 Responses to "Coming year to be positive for real estate industry"

  1. Connor MacIvor   December 28, 2012 at 8:52 am

    Hey Mike,

    I have to agree, while the world market differs greatly from our local market, I have seen similar results in the Santa Clarita Valley. Today NAR published a report about pending home sales being up from 1 year ago within the U.S. This is good news for sellers for sure. Do you think that interest rates are going to go even lower in 2013?

    You can correspond to me on our Santa Clarita real estate site at – Thanks, Connor

  2. Milton   February 24, 2013 at 5:17 am

    Everyone is wrong. The greater maoijrty of real estate agents and mortgage brokers are honest and upfront. Of course, it’s the schnooks’ who get all the attention (and, as a real estate broker, I will certainly admit that those schnooks exist). Try to find some friends and/or work colleagues who have purchased homes recently. Ask them who they used, and how pleased were they with the service provided. When you find agents with whom your colleagues/friends were pleased, set up interviews with them prior to your search, so that you can get a feel of how you might work with those folks. Do NOT necessarily look for a high producer’. Some of them got that honor because they ramrod deals’. In many occasions, a newer agent might serve you better. They are generally willing to work hard to gain your business, and have not yet had time to learn all those nasty ropes’.Ryan’s points are mostly correct, save for one. It is not neccessary to avoid listings from the same agency for which your agent works. Example ? My agency holds 70% of the listings in the area (we have 500+ agents and 14 offices). I would not recognize 75% of them by face.)


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