Time to put on my wizard hat and come up with my 2013 predictions for the year. My 2012 predictions were mostly true, so let’s see if I can get that 100% this year!!
1. Interest rates will rise. I expect interest rates to end up between 4-5% in 2013 (compared to the 3-4% in 2012) on a 30-year fixed rate. The difference is over $230/mo or about $83,000 over 30 years on a $400,000 loan.
2. Prices will continue to increase, inventory to increase slightly, multiple offers will be the norm. Our inventory is SEVERELY lacking right now – only about 2 months of supply remains in Arlington County. Prices increased last year and will continue to do so this year. Hopefully inventory levels will also increase as many new buyers are expected to pursue home buying. As a result, I suspect we’ll see multiple offers more often than not.
3. Short Sales and Foreclosures will be close to half of what they are now. In 2012, our foreclosure and short sale market was about 5.5% of total sales. I suspect it will be about 2-3% in 2013.
4. FHA premiums will rise, down-payment minimum may decrease. I personally think the Federal Housing Administration (FHA) is in financial distress and will run out of money to lend soon, but I think they will increase their FHA fees to compensate and may decrease the 3.5% minimum down-payment.
5. Housing market nationally to improve. While our market has been coming back in full force for some time, I think 2013 will be a good year for the housing market on a national level.
6. New Construction will continue to see funding and projects will break ground. We had several new projects in 2012 break ground. That will continue in 2013 – it won’t just be for sales, but also for rental buildings and commercial projects as well.
Let’s see what happens!!