Housing prices bottomed out early last year, and thanks to what happened the rest of the year we will likely look back on 2012 as the beginning of the housing recovery. General consensus is that the housing market will continue to gain momentum in 2013, but the biggest factor shaping the housing market in 2013 could well be supply.

The number of homes available for sale hung at exceptionally low levels all last year and was a contributing factor in driving up prices.


Here are some things to watch for in 2013, issues which are interdependent to the point where it can be hard to determine cause and effect…

  • Inventory levels – expected to rise as builders start more new construction and more sellers get back into the marketplace
  • Rising prices – prices expected to continue to rise, although year-over-year increases are likely to be lower than last year, where it was up 10.2% to 16.9% every month April through November 2012; the lower the inventory levels relative to number of buyers, the more prices are likely to rise because of competition; as prices rise fewer homeowners will be underwater making it possible for more people to sell and move up
  • Foreclosure starts – trend has been falling to pre-housing bust levels, shadow inventory is shrinking; fewer foreclosures at low prices should have a positive effect on home prices
  • Overall economic recovery – housing has been having a positive effect on the economy and vice versa, but price gains in the double digits aren't realistically sustainable; if unemployment continues to decline and the economy continues to improve the housing market will likely do the same
  • Sense of urgency – low inventory levels and low interest rates coupled with rising rents and rising home prices create a greater sense of urgency for buyers; if prices continue to rise at a significant level and interest rates increase, some buyers could find themselves priced out of the market for the homes they were hoping to buy

There is more optimism than there has been in a long time. In addition to buyers knowing it's a good time to buy, more sellers are feeling it's a good time to sell. Put them together and you have housing market continuing on the road to good health.

Sharlene Hensrud, RE/MAX Results – EmailMinneapolis – St. Paul Housing Market


About Sharlene Hensrud

I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity

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