Here’s another bit of good news before the year comes to end: the widely observed and greatly respected S&P/Case-Shiller index shows home prices were up 4.3 percent over a 12-month period ending in October. The latest report serves as icing on what many consider the year the housing market changed course for the better.
We’re hardly in the clear, though, warns Nick Timiraos, real estate reporter for the Wall Street Journal. Last week, Timiraos outlined the five most important housing issues to watch in 2013, along with some well-informed predictions:
1. The shadow inventory is shrinking. Banks could begin to increase the pace of foreclosed-property sales in markets with large backlogs, but they’re unlikely to deluge the market.
2. Rising prices could boost demand. Buyers now have something they haven’t had in the past few years—urgency. Rent and price gains are beginning to change consumer attitudes about home purchases.
3. Housing inventory should hit a bottom. Builders are ramping up new construction, and price gains could lead more would-be sellers to test the market.
4. Credit standards should stay tight. While rising prices could serve as a tailwind, new regulations may lock in some of the defensive underwriting posture while impeding capital rules may lead banks to pare their lending footprint.
5. Home prices should stay in positive territory next year, but everything ultimately depends on what happens in the economy. Job growth hasn’t been great, yet it has been strong enough to nudge the housing market forward.
If all of these predictions hold true, which brings you the greatest concern? Which will have the biggest impact on your business in the year ahead? Do you think Timiraos is on target?