The good news for everyone is that, unless we fall of the fiscal cliff or the Mortgage Interest Deduction gets monkeyed with, the vision is one of a good year for housing.
Knoxville, TN (PRWEB) December 21, 2012
The Holloway Group, the leading Knoxville real estate team at Gables & Gates, REALTORS recently posted a new article on their website educating clients on what they see in the Real Estate Crystal Ball for 2013.
Troy Stavros, Broker and Partner with the Holloway Group stated, "As we look into our crystal ball at what we project 2013 to look like, it has positives and negatives for both buyers and sellers of Knoxville real estate. The good news for everyone is that, unless we fall of the fiscal cliff or the Mortgage Interest Deduction gets monkeyed with, the vision is one of a good year for housing."
Vision #1: Home prices and rents on the rise.
We've already seen the lack of new construction raising the national and Knoxville real estate prices in 2012, and we can expect that trend to continue into 2013. Since the housing downturn, national new construction has been at 500,000 units or less for the last 6 years. Experts say construction of new homes and apartments need to be between 1.25 and 1.5 million a year to keep pace with population growth. This shortfall leads to a lack of supply which translates to demand, equaling higher home prices and rents.
Vision #2: Less foreclosure deals and more short sales.
Sales of foreclosed homes fell to approximately 11% of all sales in June 2012, down from about 28% in March 2011. The decrease is partly because the large government entities, along with banks, have been liquidating hundreds of distressed home loans in bulk to purchasers who agree to work out new terms with borrowers rather than foreclosing. Another factor for the drop looks back to our 1st Vision. Rising home prices have improved the equity position of thousands of buyers who were once upside-down.
Also reducing foreclosures is their alternative, the "short sale". Short sales are deals in which a home sells for less than what the borrower owes on the mortgage, with the bank agreeing to accept the sale in lieu of going through an expensive and time-consuming foreclosure. Within the past few months, FHFA issued new rules on short sales for Fannie Mae and Freddie Mac reducing the documentation that borrowers have to show to demonstrate hardship. Also borrowers now aren’t necessarily required to pay the difference between what they owe on the mortgage and the final sales price. These changes will have national and Knoxville real estate seeing more short sales in 2013.
Vision #3: Higher home construction costs.
Even though levels of home construction are at record lows, costs of building materials like sheet rock, lumber, and copper are on the rise. The last few lean years in construction caused many construction workers to either migrate out of the country or into other occupations, leaving less qualified construction workers. Once again a low supply of workers means they can demand more for their services. Couple the higher material costs with the increased cost of construction labor and that equals higher home construction costs.
Vision #4: Higher mortgage interest rates but loosened lending standards.
The National Association of REALTORS predicts rates will gradually rise to 4% by the end of 2013. While this is still extremely low, economists believe that while we are currently witnessing historically low rates, there is only one way for them to go. Currently, the average credit score of a borrower looking to obtain a mortgage is 760. This is significantly higher than averages in the past, because of an overcorrection by banks coming out of the recession. Look for lending standards to loosen a bit as lenders try to compete for the business.
ABOUT THE HOLLOWAY GROUP AT GABLES & GATES, REALTORS
The Holloway Group is committed to bringing the best possible experience to fruition for buyers and sellers of Knoxville real estate. At the Holloway Group we don't believe average is good enough for our clients. At the forefront of the Holloway Group is experience. Our team was created to serve our clients even better with specialization and expertise. We know that individually we cannot be everything to everyone so we have come together as a group, bringing all of our different strengths, so you always work with the best. We pride ourselves on being ahead of the curve on technology and how it can serve our clients. When you are a client of the Holloway Group, you can expect to have our entire team of professionals working to fulfill your individual real estate goal. As a member of Leading Real Estate Companies of the World the Holloway Group and Gables & Gates, REALTORS can assist you with finding the most qualified real estate professional to suit your needs, anywhere in the world! Contact us today for assistance.