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This Month in Real Estate for January 2013

The housing market continues to recover amid slow growth i the economy.

January 2013  Market Update 

The national housing market continues to recover as a result of existing-home sales improving with low inventory supply pushing home prices upward. National Association of Realtors (NAR) Chief Economist Lawrence Yun states, “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation. With lower rental vacancy rates and rising rents, combined with historically favorable affordability conditions, more people are buying homes.”

NAR President Gary Thomas said there had been speculation of a rise in short sales before the end of 2012 with the pending expiration of the Mortgage Forgiveness Debt Relief Act, which allows the forgiven debt to not be counted and taxed as income. He goes on to say, “There’s no movement in short sales, their market share is staying in a narrow range, and they’re still taking much longer to sell—typically three months.”

There are good signs that 2013 will be a year of recovery for the housing market. 2012 is the first year since 2005 where the year ended in positive territory, and if 2013 is anything like 2006, it could mean we are headed for a strong rebound. There is an urgency to buy now as home prices continue to increase and mortgage rates are at historic lows. 

Home sales this month increased 14.5% from last year and 5.9% this month to a seasonally adjusted rate of 5.04 million units, the highest level since November 2009. Distressed homes (which include short sales and foreclosures that traditionally sell for 15%–20% less on average compared to nondistressed homes) accounted for 22% of November sales, down from 24% the previous month and 29% last year. NAR Chief Economist Lawrence Yun states, “the market of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages.” This is a promising sign, but the amount of distressed properties is still high by historic standards.

 The current median home price rose this month to $180,600, an increase of 2.1% from the previous month and up 10.1% from last year. November marks the ninth consecutive month of year-over-year price gains, which last occurred from September 2005 to May 2006.

 Housing inventory fell 3.8% this month to 2.03 million existing homes for sale, representing a 4.8-month supply, the lowest housing supply since September 2005. An inventory supply of 6 months indicates a balanced market. More than 6 months points to a buyer’s market and less points to a seller’s market.  The current supply is further evidence that the market clearly favors sellers on average across the country. 

Source: National Association of Realtors

This month mortgage rates are at or around 3.37%, still hovering near record lows. In terms of the monthly payment on a 30-year fixed rate mortgage, a 1% increase in interest rate is the equivalent to a 10% increase in price. Low rates and a rebounding market have put buyers in a sweet spot, fueling urgency to buy now.

 

 

   

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Richard Kreimer January 19, 2013 at 07:37 PM
This is a boring cut & paste article from a national publication with no local information or relevence whatsoever. More localized information would be much more interesting. Let's see the highest and lowest sale in M'town over the past month or year, or the averages (ave. sale price, the number of transactions, or some other reasonable basis for comparison) for 2012 vs. 2011 for example. Who cares what the NAR's economist or pres. says? They were bullish in 2007 and right into the housing debacle so their track record for accuracy is suspect.
I plead the 2nd tchk tchk January 20, 2013 at 08:06 PM
anyone buying a home now is not smart. Remember you are buying a house not a mortgage rate. The government has kept housing prices artificially high with the artificially low interest rates. So when you buy a house today, even though the prices are lower, they are still over priced in most cases and you will be stuck with holding the bag when the interest rates start to skyrocket. Best to rent a place for the rest of this decade. Buy when the intrest rates go up. The prices will come down. I made a huge profit on realesate. I bought when the mortgae rates were 7.5 percent and sold when the interest rates went to 6 percent. The house doubled in value. Bottom line is those days are over, real estate is a place to live not an investment. those who buy mortgages are going to lose big time.
Al Baron January 23, 2013 at 03:36 PM
The highest sale in Morristown was $1,500,000 at 40 Park on October 22, 2012. The lowest sale was 19 Belllevue Terr for $80,000 and closed on September 19, 2012.

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