The home prices have seen unprecedented drop in a rapid succession through the recessionary years. As the economy attempts to gain its lost footing, numerous regions through the country will see a welcome rise in prices. This can be partially attributed to the purchase propositions put forward by cash buyers. Buyers who look up to have their homes financed depend heavily on the appraisal results. The appraiser has an inclination to pick up homes sharing similarity with others originating from the same location and condition, that has topped buyers’ list of preferences in the preceding three months.
Appraisers tend not to apply premiums for prevailing market scenario. The appraisal is measured up to the previous comparable sale. This puts a check on price augmentation. You can never expect the price of property to escalate if the same is going to be appraised at the value of the preceding comparable sale.
It has been a trend to reward cash buyers with a discount. The cash buyer definitely has an edge over the buyer relying on finance to buy a home. When multiple offers pour in, cash buyers will try to grab the opportunity by bidding more than the existing market value to edge out other cash buyers. These exuberant cash buyers will cause the property prices to be elevated in 2013 as appraisal is not a player with cash.
Rise in Demand but Decrease in Resale Inventory
The demand for homes is predicted to sustain at a healthy rate. The market will not be able to put up with the high demand, consequently running out of homes ready for sale. The health of a real estate market is bolstered by the activities of move-up buyers. Such buyers add to the inventory by disposing off their existing homes and purchasing a larger or costlier home. This action was missing for over seven years now.
Large segments of people did not opt for a new house after selling off their first homes. All prominent cities saw people losing home through foreclosures and short sales. This constrained such buyers to wait for minimum three years. A majority of them were not keen to buy larger homes; rather they wanted back possession of their last homes. Their sore experiences fettered them from contemplating newer ventures into real estate market.
In such a scenario there are very few homes for resale. So first time home buyers, former home owners besides cash investors are all jostling for the limited inventory of entry-level residential properties. Hence, the fact that inventory has dried up is yet another factor that is expected to push up prices in 2013.
Rise in Construction Activity
Restricted inventory and ascending prices will inspire new home builders to start construction once again. New homes are urgently required in marketplace to meet the rising demand from first time home buyers.
Mortgage payments can be afforded owing to very low interest rates. Buying a home is less expensive than renting one in many cases. A spanking new home, never occupied before is bound to capture the imagination of new buyer. Hence, constructions that stayed unfinished are likely to be completed in 2013 to capitalize on the aforesaid trend.
Changes in Mortgage Interest Deduction Likely
The mortgage interest deduction is likely to be modified. There are less chances of its complete removal. This is necessitated by the fact that the federal government wishes to fill the growing deficit besides it believes that the first time home buyers do not stand to gain substantially from it as itemization of deductions is not done by them. Rich buyers draw no benefit as the deduction is restricted at a million dollars of debt. However, the middle class buyers are likely to be affected by changes in 2013.
Mary Crane 617-413-2879