By Laura Chapman
Special To NAN
News Americas, TAMPA, FL, Fri. Jan. 18, 2013: Home prices in America, which suffered six consecutive years of falls thanks to the global recession, are expected to rise by six percent by the end of 2013.
The positive news, announced in a new report published this week, will mark the second year of increases for house prices across the country. Although growth has slowed slightly from the 7.5 percent growth recorded last year, this predicted growth is still good news for the real estate industry.
Increase in house sales
The report, which was conducted by market research firm, CoreLogic, also stated a six percent increase in the number of house sales last year, taking the total number of sales up to 4.2 million. This news will add to the growing positive sentiment that is growing throughout the American real estate industry, which had previously seen the total number of annual transactions decline consistently since 2005.
Experts attribute last year’s growth to an improved demand for housing among prospective buyers. Also, many areas of the United States, particularly in southern states such as Florida and California, have endured price cuts of up to 50 percent on property. However, this has meant that there is once again plenty of affordable stock available. Having reached a peak in 2009, the number of foreclosed home sales is now also decreasing, signaling that the country’s economy could be at the start of a financial recovery. The number of foreclosed home sales dropped last year by more than 20 percent, according to the CoreLogic report, lowering the total number of transactions to around 600,000.
“A big surprise”
Economist Patrick Newport, said last year’s increase in the value of homes was “a big surprise”, considering that forecasters had predicted an entirely different scenario at the start of the year. Many experts thought house prices would suffer a further fall, thanks to the predicted rise in foreclosed home sales. A deal that was reached by five of the country’s main lenders over foreclosures had lead to speculations of a rise in bank sales. However, this prediction did not materialize.
Adding to the positivity of the market
The CoreLogic report is one in a line of several positive indications of continued house price increases across America. Although many experts, such as professional services firm, Deloitte, have warned that the real estate market’s recovery will be slow, many reports continue to echo the optimistic sentiment outlined in CoreLogic’s predictions.
Back in October, for example, the PricewaterhouseCooper US and Urban Land Institute’s Emerging Trends in Real Estate Forecast for 2013, predicted that the prospects for all property sectors in the U.S would be better in 2013 than in 2012. Furthermore, online real estate database, Zillow, last month released its own forecast for the year ahead, predicting that home prices would see rises of 3.1 percent on average by the end of the year. Even Deloitte’s aforementioned report did have a positive underlying message, advising that recovery could be reached by innovation throughout the industry.
The increased number of short sales – where the bank permits sales to take place at a lesser amount than that owed on the mortgage – was also credited with helping to increase the overall number of real estate transactions. Levels of short sales were at their highest level since the start of the economic downturn, accounting for 23 percent of the total number of house sales.
Whether or not these positive predictions take place are dependent on a number of factors, according to economists. The main links to a positive property market are continuous positive economic conditions, such as an increase in jobs and a decrease in unemployment. Factors such as affordability and accessibility of finance are also important; last week it was reported that the average rates of 30 year fixed home loans had risen from 3.34 percent to 3.40 percent within the space of a week. Continued rate rises could stifle demand; however, it is worth noting that rates still remain close to their record low of 3.31 percent. 2012 recorded the lowest annual average rates for long term mortgages with a figure of 3.66 percent.
“Cheaper mortgages are a key reason the housing market began to come back last year,” said The Associated Press last week.