Home prices expected to go up in 2013

Home prices have gone up by more than 4 percent in 2012, and many professional forecasters anticipate that we will continue to see gains around 3.1 percent in the upcoming year. The December 2012 Zillow Home Price Expectations Survey found that optimism is strong among more than 100 economists, real estate experts, and investment and market strategists, reports National Mortgage Professional Magazine. While the fate of the mortgage-interest deduction and the Mortgage Forgiveness Debt Relief Act of 2007 remains unknown, there are still signs for positive growth in the housing market.

As housing continues to recover around the nation, some regions have become more favorable to sellers, and others more optimal for buyers. According to Zillow’s analytics, sellers’ markets tend to be clustered in the West, while buyers’ markets appear to be more prevalent on the East. In a sellers’ market, homes move more quickly and at prices close to the asking price, while in a buyers’ market, houses tend to stay on the market longer and are sold at prices lower than the listing price.

The number of homeowners with a mortgage in negative equity fell below 30 percent, reports Forbes. As home values continue to rise in the upcoming year, more underwater homeowners may take the opportunity to sell, which could both slow the upward trend in prices but also ease tight inventory in metro areas like Phoenix and Miami, where buyers have very slim pickings.

Qualifying for a home loan at historically low interest rates have saved households money. Between 1985 and 2000, Americans spent an average of 20 percent of household income on mortgage payments. The spending spiked to more than 24 percent before 2006, and fell to 13 percent by the second quarter of this year. If rates continue to stay low, homeowners and buyers will be able to continue stretching their dollars toward the purchase or refinance of a house in the new year.